Income Tax Appellate Tribunal - Delhi
Assistant Commissioner Of Income-Tax vs Dr. S.N. Gupta on 25 September, 1995
Equivalent citations: [1996]56ITD440(DELHI)
ORDER
R.M. Mehta, Accountant Member
1. The cancellation by the Deputy Commissioner (Appeals) of a penalty of Rs. 6,398 imposed on the assessee by the Income-tax Officer under Section 271 (1)(c) is in challenge in this appeal filed by the Revenue.
2. The original assessment in this case was completed on 4-10-1982 on a total income of Rs. 7,250. Search and seizure operations under Section 132 of the Income-tax Act, 1961 were conducted on 4-2-1984 at the business/ residential premises of the assessee when duplicate cash books for various years along with other "incriminating documents" were found and seized. An examination of these documents/books revealed that the entries made therein did not tally with the original books of account maintained by the assessee for the purposes of his Income-tax assessments. However, after the aforesaid search and seizure operations the assessee submitted a return of income on 26-5-1984 declaring an income of Rs. 30,000. Inasmuch as the aforesaid return had been filed after the completion of the original assessment the same was regularised by issue of a notice under Section 148. The assessee in fact stated in writing by means of communication dated 26-5-1984 that the return filed earlier be treated as one in compliance to the notice under Section 148.
3. In the aforesaid return income had been shown from house property, business and interest aggregating Rs. 30,000. However, the said return was not supported by any documents and the Income-tax Officer in fact observed that the income returned did not represent the "correct income" of the assessee. A further fact noted by the Income-tax Officer was that no ledger had been maintained as none was available. The Assessing Officer subsequently referred to the order passed by him for assessment year 1980-81 and rejecting the various contentions raised on behalf of the assessee he proceeded to compute the taxable income at Rs. 64,690 as follows :-
Capital as on 31-3-1982... Rs.
(as per duplicate cash book/ 1,90,970
documents available).
Capital as on 31-3-1981 (as
agreed to by the assessee in
the assessment year 1978-79). 1,34,780
------------
56,190
Add: Household expenses as
discussed in the earlier
years... 8,500
------------
Total taxable income : 64,690
------------
4. Being aggrieved with the assessment order, the assessee came up in appeal before the Appellate Assistant Commissioner, who reduced the taxable income to Rs. 32,700 by re-calculating the figures of capital as on 31-3-1981 and 31-3-1982 vis-a-vis the figures appearing in the assessment order and which we have reproduced in an earlier part of our order. The Appellate Assistant Commissioner also sustained an addition of Rs. 8,500 made by the Income-tax Officer on account of household expenses as relevant ground of appeal was withdrawn at the time of hearing.
5. It may be mentioned at this stage that the Income-tax Officer in the course of the assessment proceedings which culminated in an assessment order on 29-9-1984 initiated penalty proceedings under Section 271 (1)(c) and which ultimately led to the impugned penalty which took into account the facts stated in the assessment order. The assessee's arguments in the course of the penalty proceedings was primarily on the non-levy as assessment had been made on "estimated basis" whereas the Income-tax Officer laid stress on the search and seizure operations undertaken after the completion of the original assessment as also the furnishing of a return by the assessee thereafter declaring an income of Rs. 30,000 which was much higher than the earlier assessed income of Rs. 7,250. The Income-tax Officer ultimately levied a penalty of Rs. 6,398 which was challenged by the assessee before the Deputy Commissioner (Appeals).
6. We may mention at this stage that the first appellate authority by means of a consolidated order decided the appeals for assessment years 1979-80, 1980-81 and 1982-83 the latter being presently in appeal before the Tribunal. The argument advanced on behalf of the assessee was on the same lines as before the Income-tax Officer in the course of the penalty proceedings, viz., the non-levy of penalty in a case where taxable income had been computed on "estimated basis". The other submission was to the effect that there had been no concealment of income and the return filed at Rs. 30,000 had come to be finally assessed at Rs. 32,790 as result of the order passed by the first appellate authority in the quantum appeal. It is not a disputed fact before us that the said order of the first appellate authority became final as no second appeal was filed to the Tribunal by either of the parties.
7. The submissions made on behalf of the assessee found favour with the Deputy Commissioner (Appeals) who proceeded to cancel the penalty on the ground that provisions of Section 271 (1)(c) were not attracted in a case where income was computed on an "estimate basis". In the same order the Deputy Commissioner (Appeals) also cancelled the penalty for assessment years 1979-80 and 1980-81.
8. Before we proceed further, we find it necessary to mention that the Revenue's appeals for assessment years 1979-80 and 1980-81 came to be heard by the Tribunal and disposed of earlier, i.e., on 8-9-1993 by a Division Bench of the Tribunal in ITA Nos. 6791 and 6792 of 1989. The Tribunal confirmed the order of the DC (Appeals).
9. The learned Departmental Representative, on behalf of the department, at the outset, supported vehemently the penalty order and the subsequent arguents advanced by him were a reiteration of the reasons recorded by the Income-tax Officer in initiating the penal provisions and ultimately proceeding to levy the penalty itself. He highlighted the filing of the original return and completion of the assessment thereof at a nominal figure of Rs. 7,250 and the subsequent search and seizure operations when duplicate cash book and other incriminating documents were found and seized. A reference was also made to the entries in the duplicate cash book and documents and there being no corresponding entries in the original books of account maintained by the assessee for tax purposes. It was further stated that it was only as a result of the raid that the assessee subsequently filed another return of income on 26-5-1984 declaring much higher income of Rs. 30,000 and the said return being invalid in the eyes of law was regularised by issue of a notice under Section 148. The learned Departmental Representative also referred to the subsequent assessment order computing taxable income at Rs. 64,690 and its reduction to a figure of Rs. 32,790 and the latter figure having become final as there was no further appeal to the Tribunal by the assessee. The learned Departmental Representative also stressed on the fact that the figure of capital as on 31-3-1981 and 31-3-1982 was on estimate basis. The following further submissions were also made by the learned Departmental Representative with reference to the material on record :-
(i) The figure of Rs. 30,000 disclosed in the return pursuant to the first assessment could not be called a voluntary disclosure on the part of the assessee as the said return had been filed only after the search and seizure operations;
(ii) The diary found during the course of the operations contained a running account and it was in fact a day-to-day cash book;
(iii) That the income under Section 132(5) had been worked out on the basis of the seized material;
(iv) That the approximate household expenses of the assessee were shown as per the aforesaid documents at a figure of Rs. 16,385 whereas the assessee was showing around Rs. 300 per month ;
(v) Suppression of sales also emerged from the seized material; and
(vi) That the assessee had at no stage challenged that the diary was not in his own handwriting and further the difference between the income assessed earlier, viz., Rs. 7,250 and the income which was finally assessed pursuant to the second return filed after issue of notice under Section 148 was more than four times, i.e., Rs. 32,700.
10. On the basis of the aforesaid submissions the learned Departmental Representative urged that the penalty order passed by the Income-tax Officer be restored especially when there were various reported judgments which took the view that penalty under Section 271 (1)(c) could also be levied in a case where income had been computed on "estimated basis". He cited for the aforesaid proposition a judgment of the Hon'ble Supreme Court in the case of Tribhovandas Bhimji Zaveri v. Union of India[l993] 204 ITR 368 and that of the Hon'ble Karnataka High Court in the case of CIT v. K.P. Sampath Reddy [1992] 197 ITR 232. The learned Departmental Representative also placed on record a list of certain other reported decisions and which we have taken into account while disposing of the present appeal.
11. The learned counsel for the respondent, on the other hand, strongly supported the action of the Deputy Commissioner (Appeals) in cancelling the penalty and the subsequent arguments advanced by him were a reiteration of those tendered before the first appellate authority. He, however, highlighted the following:-
(i) The alleged duplicate books of account were only a cash book and no ledger was found ;
(ii) There was no basis on the part of the tax authorities in arriving at the figure of capital as no ledger had been maintained. Further no details had been given in the assessment order for arriving at a figure of Rs. 1,90,970 as the capital on 31-3-1982 ;
(iii) In the quantum appeal the Appellate Assistant Commissioner had reduced the said figure to Rs. 1,58,983 as there was apparently a mistake in calculation in the assessment order. Further the order of the Appellate Assistant Commissioner in the quantum appeal had become final as no second appeal had been filed by the Department ;
(iv) The Income-tax Officer in the assessment order had not mentioned the particulars of income which had been concealed by the assessee; and
(v) That on the same set of facts the cancellation of penalty by the Deputy Commissioner (Appeals) for assessment years 1979-80 and 1980-81 had been confirmed by the Tribunal whereas in some of the other assessment years, namely, 1975-76 to 1978-79 the Income-tax Officer himself had dropped the penalties and so was the position in assessment years 1981-82 and 1983-84.
12. On the basis of the aforesaid submission the learned counsel urged that the order of the Deputy Commissioner (Appeals) cancelling the penalty be confirmed. In support of his arguments, he placed reliance on the following reported decisions :-
(i) CIT v. Bhotica Textiles [1986] 159 ITR 355 (Cal.) ;
(ii) Sir Shadilal Sugar & General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC);
(iii) CIT v. Goswami Smt. Chandralata Bahuji [1980] 125 ITR 700 (Raj.) ;
(iv) CIT v. Jayashankdr Traders [1983] 144 ITR 208 (Mad.);
(v) Budhar Singh & Sons v. CIT [1983] 142 ITR 180 (All.); and
(vi) CIT v. N.A. Mohamed Haneef [1972] 83 ITR 215 (SC).
13. The learned counsel also sought to distinguish the various judgments relied upon by the learned Departmental Representative contending in the process that the facts were entirely different and not at all applicable to the facts of the assessee's case.
14. We may at this stage refer to two other aspects of the present appeal and the first of these is the objection regarding filing of certain documents by the learned Departmental Representative and which, according to him, were copies of the material which were already on the record. The learned counsel raised an objection to the Departmental Representative doing so on the ground that he could not do so at this late stage. We have proceeded to reject the submissions of the learned counsel for the respondent as the material in question cannot be categorised as "new material" or "additional evidence" as it is something which is already available on the record and copies have been furnished to assist the Court in arriving at a decision. The second aspect which has engaged our attention is the order of the Tribunal in respect of assessment years 1979-80 and 1980-81 and the argument of the learned counsel for the respondent that the fact in these two assessment years are at par with the facts in assessment year 1982-83 which is presently in appeal. The learned Departmental Representative in his reply referred to para 3 of the order of the Tribunal contending in the process that the matter had been decided on the concession of the Departmental Representative to the effect that the income had been estimated and there was no evidence on record to suggest concealment by the assessee. The learned Departmental Representative arguing the present appeal stated that there was no such concession in assessment year 1982-83 and there was in fact ample material to show that the assessee had concealed his income and which saw the light of day only after the search and seizure operations. In view of this distinguishing feature, we are inclined to decide the present appeal de hors the view earlier expressed by the Tribunal.
15. As already discussed earlier, this is a case in which the assessment had been completed on 4-10-1982 on a total income of Rs. 7,250 and as a result of the subsequent search and seizure operations conducted on 4-2-1984 various incriminating documents as also duplicate cash book were found and seized. It was only pursuant to the raid that the assessee on 26-5-1984 filed a return declaring an income of Rs. 30,000 and the said return being regularised by issue of notice under Section 148. It was further found by the Assessing Officer that the return filed on 26-5-1984 was not supported by any documents and further no ledger was available. The Assessing Officer, therefore, proceeded to take the figure of opening capital as on 31-3-1981 as also the figure of capital as on 31-3-1982 the first as agreed to by assessee in assessment year 1978-79 and the latter as per the duplicate cash book/documents found during the course of the raid. The difference came to Rs. 56,190 to which the Assessing Officer added Rs. 8,500 on account of household expenses arriving thereby at a total figure of Rs. 64,690. In the subsequent appeal before the Deputy Commissioner (Appeals), the matter was remanded to the Income-tax Officer to verify certain facts and figures and he in turn reported that the earlier figures worked out suffered from certain discrepancies and these were required to be recast. In this way the capital as on 31-3-1982 came to be worked out at a figure of Rs. 1,58,983 and the resultant figure after deducting the opening capital as on 31-3-1981 came to Rs. 24,200 as against Rs. 56,190 arrived at earlier. It is apparent that there was a "calculation mistake" and the relief allowed by the DC (Appeals) was not a reduction on "estimated basis" as was the case of the assessee before the first appellate authority in the penalty appeal and which is also the argument now canvassed before us. The further fact which is required to be referred to is that the addition on account of household expenses at Rs. 8,500 made by the Assessing Officer was not challenged before the Deputy Commissioner (Appeals) as the relevant ground was withdrawn.
16. In the absence of the ledger as also other relevant material and the inability on the part of the assessee to come up with cogent and relevant evidence to support his case and the second return of income not being supported by any document, the Assessing Officer had no option, but to arrive at the taxable income on a reasonable and rationale as basis and this is what he did by working out the capital as on the first and last day of the previous year and treating the balance as the assessee's income. The further addition, as already stated, was on account of household expenses which the assessee did not challenge in appeal. It is quite apparent that the complete picture emerged only after the raid and the assessee himself was obliged to file a return showing an income of Rs. 30,000 and the final assessed figure came to be worked out at a figure of Rs. 32,700 and which we have already observed is not an estimate, but the assessee's taxable income arrived at by the Assessing Officer as also the Deputy Commissioner (Appeals) on a valid and acceptable basis. According to us, the Department was not required to do anything more to prove concealment on the part of the assessee, who had not only kept back from the Department, relevant details and his true income, but also maintained duplicate cash book which in the absence of the raid would not have seen the light of day. The various decisions relied upon by the learned Departmental Representative do aptly support the case of the Revenue and we have to observe that the decisions relied upon by the learned counsel do not advance the viewpoint canvassed by him and these are clearly distinguishable. In the final analysis, we set aside the order passed by the Deputy Commissioner (Appeals) and restore the penalty order passed by the Income-tax Officer.
17. In the result, the Revenue's appeal is allowed.