Madras High Court
Commissioner Of Income Tax vs Smt. K. Meenakshi Kutty on 12 August, 2002
Equivalent citations: (2003)180CTR(MAD)190, [2002]258ITR494(MAD)
Author: R. Jayasimha Babu
Bench: R. Jayasimha Babu
JUDGMENT R. Jayasimha Babu, J.
1. The question referred to us at the instance of the Revenue is :
"Whether the Tribunal was right in holding and had valid materials to hold that the assessee has not concealed its income and that penalty under Section 271(1)(c) is not exigible for the asst. yrs. 1971-72, 1972-73, 1973-74 especially when the assessee had not maintained the accounts year after year and the income has been grossly understated?"
2. The assessee during the relevant assessment years was plying buses. She had not maintained accounts but had submitted returns in which she estimated income from six buses at Rs. 12,000 per bus. The assessee was asked to furnish various details such as the number of days on which the vehicles plied on the route; the tax paid for each of the vehicles, etc. It was found by the AO, with the particulars so furnished, that the income as estimated by the assessee was rather low. He noticed the assessee's explanation that the vehicles were old and that the routes were not remunerative. The ITO thereafter proceeded to make an estimate of the income.
3. The estimate made by the AO was much higher than the one estimate made by the assessee. The officer therefore inferred that the assessee had deliberately concealed her true income and proceeded to levy penalty.
4. On appeal to the CIT(A), the CIT(A) agreed with the assessee and held that there had been no deliberate concealment. The CIT(A) in his order relating to the asst. yr. 1971-72 held thus :
"The question, therefore, is whether the assessee has rebutted this presumption. The explanation of the assessee for returning the income at Rs. 10,000 per unit for this year on an estimated basis is because, in the assessment for the year 1969-70, the income per unit returned was Rs. 14,000 on estimate which resulted in the net income being Rs. 3,668 as against Rs. 7,050 assessed and in the assessment for the year 1970-71 because of the new bus purchased, the net income returned was Rs. 14,900 although the Tribunal had taken a different estimate of the income for the said year. This explanation would show that there was no fraud or gross or wilful neglect on the part of the assessee in offering an income of Rs. 2,500 since the income offered was Rs. 14,900 for 11 units in 1970-71 and the income offered was Rs. 12,500 for 10 units in 1971-72. As the buses in 1971-72 had become older when compared to those in 1969-70 and 1970-71, the reduction in income from Rs. 14,900 in 1970-71 to Rs. 12,500 in 1971-72 has to be held to be a bona fide reduction. Since the assessee had offered satisfactory explanations and thereby rebutted the presumption raised against him under the Explanation to Section 271(1)(c), I am of the opinion, that the assessee cannot be charged with fraud or gross or wilful neglect on his part in offering the income of Rs. 12,500. I would, therefore, allow this appeal on this ground."
5. The Revenue chose not to accept the CIT(A) findings and carried the matter to the Tribunal. The Tribunal in an elaborate order, upheld the orders of the CIT(A). It noticed the various estimates made during the different years by the assessee as also by the AO and held thus :
"There is no material to show that the assessee's claim of the value of route rights and bus was false . . . Eventually, the case boils down to one of a pure estimate of income, the estimate made by the Revenue being much higher than that returned by the assessee ..."
Thereafter, the Tribunal proceeded to conclude thus :
"In the present case, on the facts which we have set out, in, the absence of any specific discrepancy being detected or any specific omission being established, it cannot be held that there was any gross or wilful negligence on the part of the assessee in returning the income on the basis of the estimate made by the assessee in the earlier years. We, therefore, hold that the provisions of Section 271(1)(c) are not attracted in any of the assessment years and, therefore, on merits the penalties imposed cannot stand."
6. Before us counsel for the Revenue submitted that having regard to the law laid down by this Court in the case of A.K. Bashu Sahib v. CIT (1977) 108 ITR 736 (Mad), the order of the Tribunal cannot be sustained, In this case it was held that even in cases where the assessment is based on an estimate, penalty can be levied for concealment if it is found that the estimate made by the assessee was deliberate underestimate.
7. The Tribunal in this case has clearly held that the estimate given by the assessee was not the result of any gross or wilful negligence and that penalty was not called for. It is clear from a reading of the order of the Tribunal that, the Tribunal was of the view that, the estimates given by the assessee are not such as to be regarded as deliberate underestimate of income. The decision relied on by the Revenue, therefore, is not of any assistance on the facts of this case.
8. Having regard to the findings of the Tribunal which are findings of fact, the question referred to us at the instance of the Revenue must be and is answered in favour of the assessee and against the Revenue.