DAMODARAN V Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is a businessman carrying on several businesses having his head office at Trivandrum and branch offices at Kilimanoor, Madurai and Karettu. He has also been an income-tax assessee for a long time. THEse references relate to the five assessment years 1953-54 and 1955-56 to 1958-59. THE assessee's accounting year was the Malayalam year, which ends by the middle of August every Gregorian year. THE Income-tax Officer called upon the assessee during the years mentioned above to pay advance tax under Section 18A(1) of the Indian Income-tax Act of 1922. Instead of paying the demanded amounts, the assessee filed estimates under Section 18A(2) and on the basis of the said estimates paid advance tax. Ultimately, for the several years, he filed returns ; and the Income-tax Officer finally determined his incomes too. Of course, there were appeals before the Appellate Assistant Commissioner and the Appellate Tribunal, but the assessments made by the Income-tax Officer were confirmed. THEreafter, the Income-tax Officer passed penalty orders under Section 18A(9)(a) of the Act. We shall show hereinbelow in a tabular form the incomes estimated by the assessee, the incomes returned by him, the incomes finally assessed and the penalties imposed for the several years :

(2.) THE penalty orders were impugned ; and ultimately, they were all confirmed by the Income-tax Appellate Tribunal. And on the application of the assessee, the Tribunal has referred the following common question in all these cases to us. THE question is ;

(3.) WHAT we hasten to point out is that the conclusion of the Income-tax Officer in the cases before us is not based merely on the rejection of the explanation given by the assessee. We may, for a minute, revert to the decision of the Supreme Court in Anwar Ali's case itself for the principle that has to be followed in cases like these. The Supreme Court has observed in that case that it would be perfectly legitimate to say that the mere fact that the explanation of the assessee was false did not necessarily give rise to the inference that the disputed amount represented income--of course, it was a piece of good evidence ; but, before penalty could be imposed, the entirety of the circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. This, in our opinion, is the crux of the matter : this indicates that all the circumstances of the case have to be taken into consideration before the Income-tax Officer comes to a conclusion as to whether the ingredients mentioned in Section 18A(9)(a) are established.