1980 Supreme(Raj) 175
RAJASTHAN HIGH COURT AT JAIPUR BENCH
C.M.Lodha, N.M.Kasliwal, JJ.
The Commissioner of Income-Tax, Jaipur - Appellant
Versus
Dr. R.C. Gupta and Company Bharatpur - Respondent
D.B. Income Tax Reference Case No. 27 of 1971.
Decided On : 8-01-1980
Advocates:
For the Revenue :S.M. Mehta, Advocate.
For the Opposite party : None.
Where the assessee admits concealing income, no further evidence is necessary to prove concealment of income.
Headnote:
INCOME TAX - CONCEALMENT OF INCOME - PENALTY - ASSESSEE ADMITTING INCOME FROM SALE OF IMPORTED CYCLE PARTS NOT RECORDED IN BOOKS OR RETURN - TRIBUNAL HOLDING NO CONCEALMENT - HELD, TRIBUNAL NOT JUSTIFIED - PENALTY LEVIED BY IAC JUSTIFIED.
Fact of the Case:
The assessee, Dr. R. C. Gupta, filed income tax returns for the assessment year 1959-60, declaring income from property and business. The ITO determined the income from property and business at Rs. 4,525 and Rs. 1,785, respectively, and added Rs. 19,164 as concealed income from the sale of imported cycle parts. The AAC reduced the concealed income to Rs. 18,328. The Tribunal held that the department had failed to prove concealment of profit and no penalty could be imposed. The Commissioner applied to the Tribunal to state a case and refer the question of law to the High Court.
Finding of the Court:
The High Court held that the assessee had admitted concealing the profits on the sale of imported cycle parts, and the Tribunal was not justified in holding that the department had not discharged the onus of proving concealment of profits. The Court opined that in a case where the assessee himself has admitted that the amount in question represented his income, no further evidence would be necessary to show that it was the amount which represented his income and/or that it represented his concealed income.
Issues: Whether the Tribunal was justified in holding that the assessee had not concealed the profits on the sale of sets of cycle parts so as to attract penalty under section 271(1)(c) of the Income-tax Act?
Ratio Decidendi: The Court held that the assessee had admittedly concealed the profits on the sale of sets of cycle parts, and the Tribunal was not justified in holding that the department had not discharged the onus of proving concealment of profits. The Court opined that in a case where the assessee himself has admitted that the amount in question represented his income, no further evidence would be necessary to show that it was the amount which represented his income and/or that it represented his concealed income.
Final Decision: The Court answered the question in the negative, in favor of the department, and held that the penalty levied by the IAC was justified.
JUDGMENT
1. - This reference has been made by the Income-tax Appellate Tribunal, Delhi Bench " C ", in compliance with the directions of this court contained in the order dated February 16, 1970, in D.B. Civil Income-tax Case No. 66 of 1969, It arises out of the order dated October 5, 1967, by the Tribunal in Income-tax Appeal No. 11677 of 1965-66.
2. The assessment year under consideration is 1959-60 (ending on March 31, 1959). The assessee, Dr. R. C. Gupta, carries on business under the name and style, Dr. R. C. Gupta & Company, as well as M/s. Laxmi Cycle Industries. He filed a return in the name of Dr. R. C. Gupta and Company, declaring an income of Rs. 3,022 from the property as well as business in cycle and motor parts, etc. He also filed another return in respect of his business carried on under the name and style, M/s. Lax mi Cycle Industries, and returned " nil " income (though the trading and profit and loss account showed a profit of Rs. 248). The ITO, however, did not accept the income as returned by the assessee. He determined the income from property as well as from the business carried on under the name and style, Dr. R. C. Gupta & Company, at Rs. 4,525 and the income from the business carried on under the name and style, M/s. Laxmi Cycle Industries, at Rs. 1,785 as disclosed from the books. But he also found that the books of account produced by the assessee did not disclose a correct state of affairs and that the assessee had concealed the income derived by him from the sale of cycle parts which he had imported. These transactions, according to the ITO, were outside the books. Consequently, he obtained details of the transactions of sale made by the assessee in respect of the imported cycle parts and calculated profit on the same at the rate of Rs. 4 per set (consisting of one pair of hub, a chain and a free-wheel) as against Rs. 3 per set admitted by the assessee, in respect of 4,791 sets. Thus, the ITO added a sum of Rs. 19,164 to the income shown by the assessee. Certain other additions were also made but we are not concerned with the same. Suffice it to say that he computed the total income of the assessee at Rs. 55,248 by his order dated October 29, 1963 (annex. A). The ITO also issued notice to the assessee to show cause why penalty be not imposed on him under section 271(1)(c) of the Income-tax Act, 1961 (which will hereinafter be referred to as " the Act ").
3. Dissatisfied with the order of the ITO, the assessee filed appeal before the AAC, who, by his order dated October 12, 1964, held that the rate of profit on each set of the imported cycle parts sold by the assessee should have been calculated at Rs. 8 per set instead of Rs. 4, as was done by the ITO. However, he found that the total number of sets sold by the assessee was only 2,291 as against 4,791 determined by the ITO. Calculated on the revised basis, he assessed the income from the sale of the cycle parts at Rs. 18,328 as against Rs. 19,164 determined by the ITO. The assessee filed further appeal to the Tribunal which maintained the addition of Rs. 18,328 as determined by the AAC. The copies of the orders of the AAC and the Tribunal have also been submitted by the Tribunal and are marked annexs. "B" and " C", respectively.
4. Adverting to the penalty proceedings, since the amount of penalty involved was more than Rs. 1,000, the ITO submitted the proceedings to the IAC, who, by his order dated October 22, 1965 (annex " D "), imposed a penalty of Rs. 9,700 on the assessee. It may be relevant here to mention that while determining the quantum of penalty, the IAC took into consideration the concealed profit on the sale of cycle parts as well as two more items of concealed profit and thus imposed the penalty of Rs. 9,700 on concealed income of Rs. 32,969. The assessee filed appeal before the Tribunal from the order of the IAC. The Tribunal held that the onus lay wholly upon the department to prove that the assessee had actually made profits higher th
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