BEENA METALS VS COMMISSIONER OF INCOME-TAX
2001 P T D 3214
[240 I T R 2221
[Kerala High Court (India)]
Before Om Prakash, C. J. and J. B. Koshy, J
BEENA METALS
Versus
COMMISSIONER OF INCOME‑TAX
I.T.R. No.49 of 1996, decided on 09/10/1998.
Income‑tax‑‑‑
‑‑‑‑Penalty‑‑‑Concealment of income‑‑‑Failure to furnish particulars of brokers through whom purchases made‑‑‑Failure to produce purchase and sale registers and stock register‑‑‑Assessing Officer finding some purchase bogus ‑‑‑Assesssee himself admitting concealment of income to extent of bogus purchases‑‑‑Concealment proved‑‑‑Levy of penalty valid‑‑‑Indian Income Tax Act, 1961, S.271(1)(c).
The assessee filed a return of income declaring a total income of Rs.2,10,460. Thereafter, revised returns were filed showing income of Rs.3,76,920 and Rs.4,21,920. The Income‑tax Officer issued notices to the assessee for levy of penalty under section"271(1)(c) of the Income Tax Act, 1961, for concealment of particulars of income on the ground that purchases made by the assessee aggregating to Rs.1,61,459 were bogus. The assessee explained that purchases had been made through brokers and there was no direct link between the assessee and the suppliers, and therefore, the suppliers could not be identified. The Assessing Officer, however, held that despite sufficient opportunity being given to the assessee to produce purchase and sale registers and the stock register coupled with the stock inventories for the relevant period, the assessee could produce only the stock inventory, that neither the purchase and sale registers nor the stock register showing the day‑to‑day stock position was produced, that even the names and addresses of the brokers through whom the purchases were said to have been made were not furnished, that the assessee himself had stated before the Assessing Officer that if at all there was concealment with regard to bogus purchases, it could be taken at Rs:1,61,459, that during the search operation at the assessee's premises it was discovered that the assessee had understated stock to the extent of Rs.3.5 lakhs and that in the successive revised returns the additional income was declared by the assessee having known that the Department had discovered the bogus purchases. The Assessing Officer imposed a penalty of Rs.1,05,730 under section 271(1)(c) of the Act. The assessee's appeal before the Appellate Assistant Commissioner and the Tribunal failed. On a reference:
Held, affirming the decision of the Tribunal, that there was concealment of income to the extent of Rs.1,61,459 and the levy of penalty was, therefore, valid.
P. Balachandran for the Assessee.
P.K.R. Menon, Senior Advocate and N.R.K. Nair for the, Commissioner.
JUDGMENT
OM PRAKASH, C.J.‑‑‑The Income‑tax Appellate Tribunal referred the following questions relating to the assessment year 1987‑88 under section 256(1) of the Income Tax Act, 1961, for the opinion of this Court:
"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in upholding the levy of penalty under section 271(1)(c) of the Income‑tax Act? .
(2)Whether, there were materials for the Appellate Tribunal to come to the conclusion that there was concealment of income to the extent of Rs.1,61,459 by the applicant?"
The facts, as gleaned from the penalty order, are thus: The assessee filed a return of income on October 30, 1987, declaring a total income of Rs.2,10,460. thereafter, a revised return was filed on. March 23, 1988, declaring total income at 8.3,76,920. Again a revised return was filed on June .13, 1988 declaring a total income of Rs.4,21,920 on which assessment was completed on March 1, 1989. A penalty notices was issued simultaneously calling upon the assessee to show cause why penalty under section 271(1)(c) of the Income‑tax Act should not be levied for concealment of particulars of income. Pursuant to the said show‑cause notice, a reply was filed by the assessee. The Assessing Officer discovered that purchases purporting to have been made from Vijaya Metal Industries, Padivattom, Cochin, by the assessee aggregating to Rs.1,61,459 were bogus. The explanation of the assessee was that purchases had been made through brokers and there was no direct link between the assessee and the suppliers and, therefore, the suppliers could not be identified.
The Assessing Officer, however held that despite sufficient opportunity being given to the assessee to produce purchase and sale registers and the stock register coupled with the stock inventories for the relevant period, the assessee could produce only the stock inventory. Neither were purchase and sale registers nor was the stock register showing the day‑to‑day stock position produced. The argument of the assessee was that such registers were not maintained. Even the name and address of the brokers through whom these purchases were said to have been made, were not furnished. The Assessing Officer in the penalty order also observed as under:
"During the discussion, the assessed's representative argued that even if penalty is to be levied in this case, the concealed amount could be taken at the most at Rs.1,61,459.."
The Assessing Officer did not accept the contention of the assessee that the purchases were genuine. He found that there was ‑ a search operation on the assessed's premises on October 22, 1986, when it was discovered that the assessee had understated the stock to the extent of Rs.3.5 lakhs. The Assessing Officer further found that in the successive revised returns the additional income was declared by the assessee having known that the Department had discovered the bogus purchases. This is how the Assessing Officer imposed penalty at Rs.1,05,730 under section 271(1)(c) of the Income‑tax Act. In appeal before the appellate authority and before the Appellate Tribunal, the assessee failed.
From the foregoing facts, it is amply clear that the assessed failed to furnish the particulars of brokers through whom the purchases were claimed to have been made. The assessee also failed to produce the purchase and sale registers and the stock register.
On these facts, we are of the considered view that the Assessing Officer was right in, holding that the purchases to the extent of Rs.1,61,459 were Bogus. Before the Assessing Officer, the representative of the assessee himself stated that if at all concealment was there with regard to bogus purchases, that could be taken at Rs.1,61,459. On these facts nothing but a clear inference of concealment could be drawn by the authority.
In the result, we answer both the questions in the affirmative, that is, in favour of the Revenue and against the assessee.
M.B.A./315/FCReference answered