KHANCHAND THAKURDAS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS petition is directed against the order made by Commissioner of Income-tax (Central), Nungambakkam, Madras, dated January 4, 1977, in exercise of his jurisdiction under s. 271(4A) of the I.T. Act, 1961 (hereinafter referred to as "the Act"), corresponding to the present s. 273A of the Act.

(2.) THE facts that are required to be stated briefly for a just disposal of the case are as follows: THE petitioner is a firm carrying on business in hundi banking. It has its business in Trichy, Bombay and Bangalore. Separate books of account are kept in respect of the three centres and the return was filed for the assessment year 1964-65 on August 19, 1969, belatedly. THE petitioner was assessed, on the return filed, to a taxable income of Rs. 1,30,100. THE total tax payable by the firm was Rs. 10,934. Before the assessment was concluded on June 28, 1967, as is evidenced by the order of assessment, nearly, the whole of the tax due had been paid leaving as balance of a few hundred rupees. However, proceedings under s. 271(1)(a) of the Act were initiated against the petitioner-assessee firm for belated filling of the return for the relevant assessment year. While those preceedings were still pending, the ITO initiated proceeding sunder s. 147(b) of the Act to bring to tax some income which had escaped assessment on the information received by him. THE information received was that some of the partners were using part of the business premises of the firm for their residence. When the assessment was first concluded, the entire rent paid for the business premises had been allowed as a deduction. On the information now received, the ITO added back a sum of Rs. 1,200 being part of the rent for the premises as personal and brought the same to tax. THE tax liability was, therefore fixed at Rs. 11,107. After this was done, the proceedings under s. 271(1)(a) of the Act were completed and a penalty of Rs. 18,070 was imposed on the assessee-firm. Aggrieved by the same, the petitioner applied for revision of that order under s. 271(4A) of the Act, as it was then, resulting in the order now impugned in this writ petition.

(3.) THE next reason is that it is not a full disclosure. No doubt, the assessee did not disclose the fact of using part of the premises as residence of some of the partners. From that, it cannot necessarily be inferred that the income of the firm was not fully disclosed. All that the ITO on receiving the additional information subsequent to the original assessment order was to add back an allowance and bring that allowance to tax. THE total income as disclosed in the original assessment was a full disclosure. THErefore, even here the Commissioner is not correct in comming to the conclusion that no case made out under sub-s (4A) of s. 271 of the Act for the late filling.