Standard Hind Company vs Commissioner of Income Tax and Another

Prakash Krishna, J.—The present appeal has been filed under s. 260A of the IT Act, 1961 (hereinafter referred to as ''the Act'') and it relates to the asst. yr. 1993-94. The appeal arises out of penalty proceedings under s. 271 (1)(c) of the Act. The following questions of law are involved in the appeal:

Whether upon the facts and circumstances of the case, the Tribunal was justified in holding that the revised return filed by the assessee, surrendering the amount of Rs. one lac which was due to totalling mistake committed by the accountant, was a case of concealment of particular of income ?

Whether upon the facts and circumstances of the case, the Tribunal was Justified in holding that the surrender of Rs. one lac by the assessee to be added to its income as extra profit by filing revised return was not bonafide and was not to purchase peace and avoid litigation ?

Whether upon the facts and circumstances of the case, the Department had discharged its burden to prove concealment ?

Whether upon the facts and circumstances of the case, the Tribunal was justified in setting aside the order of CIT(A) deleting the penalty imposed under s. 271(1)(c), on surmises and conjectures ?

Whether upon the facts and circumstances of the case, filing of revised return and surrender of the amount, resulted due to totalling mistake of accountant, to be added as extra profit can be termed as fraud, willful... or concealment within the meaning of s. 271(1)(c) of the Act?

All the aforesaid four questions are interwoven and relate to legality and propriety of levy of penalty under the aforesaid section after not accepting the explanation given by the assessee with regard to the discrepancy in purchase figure detected by the AO.

The relevant facts may be noticed in brief:

The assessee declaring a total income of Rs. 18,860 filed the return of income on 30th Sept., 1993. As per the said return, total purchases were shown at Rs. 29,00,778 and sales at Rs. 31,93,81. An order under s. 143(1)(a) of the Act accepting the return was passed on 11th March, 1994. The assessment was reopened subsequently by Issuing notice under s. 143(2) of the Act. AO asked the assessee to furnish month-wise details of purchases and sales, both quantity-wise and value-wise. The details of purchase were filed on 19th July, 1994 declaring total purchases at Rs. 29,00.778. On scrutiny, the AO found that in the month of January, 1993 as per ledger, purchases were made to the tune of Rs. 2,28,280 while as per details furnished by the assessee, it was shown at Rs. 3,28,280. The return was again revised on 23rd Nov., 1994 declaring the income of Rs. 1,18,860. The assessee surrendered amount of Rs. 1,00,000 on account of inflation of purchases. Certain additions were made by the AO who framed the assessment order. The penalty proceedings giving rise to the present appeal were initiated on the ground that the assessee has inflated the purchases by Rs. 1,00,000 by showing wrong particulars and purchases relating to month of January, 1993. The only explanation offered by the assessee that it was due to mistake of accountant, was not accepted and a sum of Rs. 50,000 was levied as penalty by the penalty order dt. 25th May, 1995. In appeal, CIT(A) set aside the penalty order on the finding that it was a case of mistake on the part of accountant and once the mistake came to the knowledge of assessee, he surrendered the said amount for being added with his income vide order dt. 9th Nov., 1995. The Department carried the matter in further appeal before the income tax Appellate Tribunal, Delhi Bench ''SMC-II* : New Delhi (hereinafter referred to as ''the Tribunal*) in ITA No. 529/Del/1996. The Tribunal accepted the appeal and restored the penalty order by order under appeal.

Sri Shakeel Ahmad, learned counsel for the assessee submits that it was a case of mistake and as soon as the mistake came to the knowledge of the partners of firm, a sum of Rs. 1,00,000 was surrendered in order to purchase peace. There was no mala fide intention in disclosing inaccurate or wrong particulars of purchases made in the month of January, 1993. It was totalling mistake and nothing more than that. Strong reliance has been placed by him on Sir Shadi Lal Sugar and General Mills Ltd. and Another Vs. Commissioner of Income Tax, Delhi, and an unreported decision delivered in IT Appeal No. 21 of 2003, Punjab Rice Mills Vs. Commissioner of Income Tax and Another, .

In contra, Sri Dhananjay Awasthi, learned counsel for the Department submits that the finding of the Tribunal that it was not a case of bona fide mistake, is essentially a finding of fact. It is a case where the assessee went on revising its IT return one after another and when he was caught by the AO, a sum of Rs. 1,00,000 was surrendered to be added in the income. Submission is that the subsequent decision of apex Court in the case of Union of India (UOI) and Others Vs. Dharamendra Textile Processors and Others, , is the final and binding authority on the subject.

Considered the respective submissions of the learned counsel for the parties and perused the record.

The facts are not much in dispute. It appears that the matter was heard by this Court earlier as per order sheet dt. 1st Dec, 2011. On that date, learned counsel for the appellant took time to produce before the Court a copy of revised return along with all Annexures etc. filed on 25th July, 1994 wherein total income of Rs. 68,860 was declared. The matter was listed on multiple dates but the appellant could not produce the copy of revised return. Instead, supplementary affidavit stating that the appellant vide letter dt. 23rd Dec, 2011 applied for certified copy of the said revised return filed on 25th July, 1994 but till date, it has not been received by him. The appeal was heard on merits on the basis of available material before the Court. The Tribunal has mentioned dates- wise events happened in the case. It would show that initially the return declaring income of Rs. 18,860 was filed which was accepted under s. 143(1)(a) of the Act. Assessment was reopened and account books were examined. The assessee was asked to file details of purchases and sales, both quantity-wise and value-wise. The same was filed. On scrutiny of the account books, the AO detected that as per ledger, actual purchase was Rs. 2,28,280 but it was shown as of Rs. 3,28,280. The discrepancy in the two figures of purchase is of Rs. 1,00,000. The Department impounded the account books of the assessee and recorded statement of one of his partners. The assessee made statement that the discrepancy in purchases figures of January, 1993 occurred due to fault on the part of the accountant. This plea which was not accepted by the AO, was accepted by the first appellate authority. The Tribunal which is last and final authority again considered the matter and in depth analysis, came to the conclusion that the conduct of assessee in surrendering Rs. 1,00,000 was not bona fide. The said finding Is basically a finding of fact and is binding on us. An inference drawn by the Tribunal that the assessee''s case was taken up for scrutiny and it filed revised return twice and was caught and pinpointed by the AO that purchases figures relating to month of January, 1993 has been inflated by Rs. 1,00,000. The assessee surrendered the same and the surrender is not bona fide. The inference drawn by the Tribunal on the above fact is plausible one and it cannot be said arbitrary or imaginary.

Noticeably, in original IT return, total income of Rs. 18,860 was disclosed which was revised to Rs. 68,860 and was again revised by declaring the income of Rs. 1,18,860, is indicative of conduct of assessee. For the sake of brevity, we are not producing the relevant discussion made by the Tribunal in para 6.2 of the order. Suffice it to say that the Tribunal has found that the concealment has been detected by the AO and the same forced the assessee to file the revised return. AO and the Tribunal both have rejected the contention of the assessee that Rs. 1,00,000 was surrendered just to buy peace with the Department. It is clear case of concealment of income and furnishing of wrong particulars of income. Here is a case where the addition was not made in the income on estimate and surmises. A specific concealment for a particular month was detected by the AO.

Now, we take up the decision relied by the learned counsel for the assessee. Sir Shadilal Sugar & General Mills Ltd. (supra) is a case where s. 271(1)(c) was up for consideration before amendment in the year 1964. The word "deliberate" was earlier before the words "furnish inaccurate particulars of such income" in cl. (c) of s. 271(1) of the Act. The said word was deleted subsequently in the year 1964. The decision rendered by the Supreme Court should be understood in the above legal context as it existed prior to the amendment in the year 1964. There being an amendment in the statute, relied upon decision is of little help to the assessee. It may be noted that in the aforesaid case, the order of penalty was set aside by the Tribunal but restored by the High Court. The Supreme Court relying on its earlier pronouncement in Udhavdas Kewalram vs. CIT (1967) 66 ITR 462 (SC), held that the Tribunal performed a judicial function under the IT Act and it was invested with authority to determine finally all questions of fact. The Tribunal was undoubtedly competent to disagree with the view of the first appellate authority; but in proceeding to do so, it had to act judicially, i.e., to consider all the evidence in favour of the Department and against the assessee. It was held that the Tribunal had properly considered all the evidence in that case and decided the questions of fact, and the High Court was not justified in a reference under s. 66 of the old IT Act by going behind the Tribunal''s finding of fact. The same principle is applicable in the present case also so far as it concerns with the scope of interference under s. 260A of the Act to the questions of fact. In other words, the finding that there was no bonafide mistake on the part of the assessee recorded by the Tribunal is final and binding in the appeal.

The unreported judgment relied upon of Punjab Rice Mills (supra) is of not much help to the appellant. It was a case where addition was made in the income of assessee. It was found that entire accounts were placed before the AO who did not discover any incriminating material on the basis of which he could draw a conclusion that the assessee had deliberately concealed the income. The assessee voluntarily surrendered Rs. 2 lakhs when the AO did not accept certain entries in the books of accounts. There were 16 partners who were uneducated and belonged to banjara community and had no knowledge of the accounts. The decision was rendered in peculiar facts of that case. Here, it is not so that either the partners are uneducated or they lack knowledge with regard to accounting. Here is a case where concealment of income and furnishing inaccurate particulars of income was surfaced by the AO only then Rs. 1,00,000 was surrendered, after availing multiple opportunities of filing revised returns. The decision relied upon by the learned counsel for the appellant in the case of Punjab Rice Mills (supra) is, therefore, distinguishable on facts and cannot be applied in the case on hand.

No illegality or perversity in the finding of fact could be pointed out by the learned counsel for the appellant. No material was placed before us to take a different view of the matter.

Any other point was not pressed.

In view of the above discussion, we do not find any illegality in the order of the Tribunal. The questions of law raised in the appeal are decided against the appellant by holding that it was a case where the explanation given by the assessee has not been found to be bona fide and the Department has been able to prove the income concealed and filing of its wrong particulars, by the assessee. The appeal lacks merit. It is, hereby, dismissed but no order as to costs.