CITY DRY FISH COMPANY VS COMMISSIONER OF INCOME TAX, 2000 PTD-ANDHRA-PRADESH-HIGH-COURT-INDIA 3543 (1999)

(a) Income-tax---

----Penalty---Concealment of income---Penalty based on addition to income- Addition deleted by Tribunal---Penalty could not be levied---Indian Income Tax Act, 1961, S.271(1)(c).

(b) Income-tax---

----Reference---Application to direct reference---High Court expediting case by deciding it---Indian Income Tax Act, 1961, S.256.

Held, (i) that the points had been decided straightaway instead of directing the case for reference and then ordering the reference, which will take another decade. .

(ii) That, in the instant case, the order of the Tribunal was to the effect that the sum of Rs.85,622 pertained to the year previous to the assessment year 1980-81 and was available as reserve and, as such, the order of the Income-tax Officer clubbing that amount of Rs.85,622 as the income for the assessment year 1980-81 stood set aside. As a necessary corollary, the levy of penalty on the above component also had to be set aside.

Ch. Srirama Rao for the Assessee.

S.R. Ashok for the Commissioner.

JUDGMENT

B. SUBHASHAN REDDY, J--This Income-tax case came up pursuant to the application made by the assessee under section 256(2) of the Income Tax Act, 1961, aggrieved by the action of the Tribunal in refusing to make a reference.

The assessee was a partnership firm consisting originally of 18 partners. There was a change in the constitution of the firm, as six partners retired and in their place, six others were admitted. The business of the firm consisted of purchase and sale of dry fish on wholesale basis either self or commission basis. For the accounting year ending on September 30, 1979 (assessment year 1980-81), the firm filed a return on July 19, 1980, declaring the income of Rs.2,07,03, which was supported by the books of account. But, in a proceeding under section 132 and consequent to the search of the premises of the assessee, a note-book was recovered from the accountant of the firm, which disclosed a division of Rs.4,000 per share. The assessee had filed a revised return declaring the income of Rs.3,79,689, the details of which are as follows:

But, the Income-tax Officer added the sum of Rs.85,622 negativing the claim of the assessee that the same was the reserve of the previous year and was already subjected to tax. The matter ultimately landed in the Income-tax Appellate Tribunal, Hyderabad Bench, which by its order, dated December 30, 1987, held that six partners who had retired had taken away their respective shares from the sum of Rs.85,622, which was in reserve. But, what was the amount, precisely, taken by the said partners was not available and, as spch, for the ascertainment of the same, the case was remitted back to the Income-tax Officer. The order of the Tribunal is to the effect that an amount of Rs. 85,622 pertained to the year' previous to the assessment year 1980-81 and was available as reserve and, as such, the order of the Income-tax Officer clubbing that amount of Rs.85,622 as the income for the assessment year 1980-81 stood set aside. As a necessary corollary, the levy of penalty on .the above component also stands set aside. We have decided these points straightaway instead of directing the case for reference and then ordering the reference, which will take another decade.

To the above extent, the impugned order of the Income-tax Appellate Tribunal is set aside. Now, the concerned Income-tax-Officer shall decide the details of the profit-sharing ratio of the outgoing partners and then arrive at the balance and pass orders afresh.

The income-tax case is disposed of accordingly. No costs.

M.B.A./68/FC Order accordingly.