COMMISSIONER OF INCOME TAX Vs. INDIA SEA FOODS

JUDGEMENT

(1.) The Reference is at the instance of the Revenue, assessment year being 1967-68. Assessee filed return of its income on 10-4-1968 disclosing income of Rs. 2,75,000/-, but stating that its accounts were pending finalisation and that the return was only provisional. It was stated that the return would be amended on finalisation of the accounts. The Managing Partner of the assessee, who was also the Managing Partner of two other sister firms, sought settlement of the matters relating to income tax by filing a petition before the Commissioner of Income Tax. In the petition he disclosed the wealth position of the partners and of the firms as on 31-12-1958 and 31-12-1967. Following discussion and correspondences between the parties the assessee furnished a revised return on 18-12-1968 disclosing income of Rs. 3,07,428.04. Eventually an agreement was entered into on 27-8-1969. The settlement related to the tax liabilities of all the three firms and their partners upto the year 1968-69. The assessee agreed for treating Rs. 7,00,000/- as its income not disclosed in the returns of the years upto 1968-69 and wanted it to be apportioned between the years 1964-65 and 1968-69 on the basis of the turnover. Under Clause.6 of the agreement the assessee agreed to the Department levying minimum penalty prescribed under the Act for the years 1964-65 to 1968-69 with regard to the added income of Rs. 7,00,000/-. On the basis of the said agreement revised assessments were completed, the addition for the assessment year 1967-68 being Rs. 1,64,687. The Inspecting Assistant Commissioner imposed a penalty of Rs. 1,64,687/- under S.27(l)(c) of the Income Tax Act, 1961.

(2.) At the instance of the Revenue and pursuant to the direction issued by this Court in O.P.2141 of 1979 under S.256(2) of the Act the Tribunal referred four questions of law as arising out of the order dated 18-4-78 of the Tribunal under S.260(1) of the Act in ITA 404/Coch/71-72 of the Assessment Year 1967-68. The Tribunal was unable to find that the second return was furnished with the intention to conceal or that there was concealment of the income.

(3.) Counsel for the Revenue contended that it was not open to the Tribunal to go behind the agreement between the parties. According to him, Clause.6 of the agreement would really show that the assessee had agreed that the Department can levy minimum penalty prescribed under the Act for the Assessment years 1964-65 to 1968-69 in the case of M/s. India Sea Foods in whose hands the unaccounted income of Rs.7,00,000/- is, proposed to be assessed. He contended that the Tribunal should not have set the agreement at naught with a finding of its own on the question of concealment. Also it is contended that the presumption under explanation to S.271(1)(c) is available in favour of the Revenue as it stood then that there was concealment of particulars of income by the assessee inasmuch as the returned income was less than 80% of the assessed income and hence the burden to dislodge the presumption is squarely upon the assessee. In other words, it is contended that as the levy of penalty for the year 1968-69 was based on the admissions in the agreement no other view is possible.