K. Sreedharan and Co. vs Assistant Commissioner of Income Tax

C.N. Ramachandran Nair, J.—Heard counsel for the appellant and standing counsel for the department.

The question raised is whether the Tribunal was justified in sustaining the penalty levied u/s 271(1)(c) and confirmed in first appeal. The appellant was engaged in the business of running theatre, bar, hotel and besides all these sale of arrack as a licenced dealer. During the previous year 1994-95 the department noticed that the assessee''s accounts pertaining to arrack business was unreliable because in the first place assessee declared massive loss of above Rs. 12 lakhs which is unusual in the nature of the business. Secondly department found that sale price of arrack in the beginning of the financial year was Rs. 200 per litre, whereas towards the end sale price declined up to Rs. 80 per litre. After finding the accounts as unreliable, the assessment was completed with an addition of Rs. 15 lakhs. There is no dispute that the assessment got confirmed at all levels which was confirmed by this Court. The penalty at Rs. 15 lakhs was levied u/s 271(1)(c) which is modified by the first appellate authority by directing levy of minimum penalty, against which appellant filed an appeal which was dismissed by the Tribunal.

The contention raised by the appellant is that department has not established concealment of income and so much so penalty cannot be levied. This is against settled position of law declared by the Supreme Court in M/s. K.P. Madhusudhanan Vs. Commissioner of Income Tax, Cochin, . Following this judgment this Court in similar case in Commissioner of Income Tax Vs. Sree Krishna Trading Co., held that onus of proof is on the assessee. In fact assessee had raised an additional ground in the appeal before the Tribunal which is also seen considered by the Tribunal and Tribunal found that the Assessing Officer has not recorded the reason for initiating penalty is factually incorrect and the officer has recorded the same. The only question arising is whether onus is on the Assessing Officer or on the assessee on concealment. The argument of the assessee is against settled position declared by this Court and the Supreme Court after the amendment to Section 271(1)(c) which has shifted the burden to the assessee. Considering the facts found by the Tribunal and since penalty sustained by the authorities is minimum, we do not find any ground to interfere with the order of the Tribunal. Appeal is accordingly dismissed.