INDIAN CLOTH DEPOT Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Cochin Bench, has referred the following four questions of law for the decision of this court :

(2.) WHETHER, on the facts and in the circumstances of the case, the Tribunal is right in holding that even in the absence of any records to show concealment or the quantum thereof for the assessment years 1970-71 to 1974-75, levy of penalty is justified?

(3.) ON hearing the rival contentions of the parties, we are of the view that the decision of the Appellate Tribunal is justified. It is common ground that there was a search of the assessee's premises on June 7, 1975. Then several books of account and documents were seized. Most of them related only to the assessment year 1974-75. But, Aboobacker Haji, one of the partners of the firm, in his statement dated June 7, 1975, categorically stated that original books of account, similar to those obtained during the search, were maintained by the firm for the earlier years also, but that they were destroyed. During the course of the assessment, the assessee could not explain the cash position as on April 17, 1974. The Income-tax Officer adverted to the explanation offered, but found that as on March 31, 1974, the difference in cash position would work out to Rs. 4 lakhs. The assessee pleaded, which was supported by the statement of its partner, Aboobaker Haji, that this difference arose not in the particular year, but was being carried on from year to year from 1970-71. The Income-tax Officer came to the conclusion that there were profits outside the books from 1970-71 onwards. Since the secret books of the earlier years were said to be destroyed, the Department was compelled to make an assessment with reference to the unexplained discrepancy detected. The matter was worked out backwards from April 17, 1974. After arriving at the unexplained cash difference as on March 31, 1974, at Rs. 4 lakhs, the assessee's plea that it should be spread over for the five years was accepted. It was the assessee's plea that the surplus did not relate to the assessment year 1974-75 alone. The Revenue had no other option. So, the apportionment of Rs. 4 lakhs was made for the five years at the rate of Rs. 80,000 per year. In this regard, the Income-tax Officer refused to accept that the undisclosed income was only Rs. 50,000 as disclosed in the returns filed under the voluntary disclosure scheme. He added a sum of Rs. 80,000 for each one of the years. In the penalty proceedings, the Inspecting Assistant Commissioner found independently that the above finding is justified on facts. The Appellate Tribunal also referred to the above facts and, in particular, to the statement of Aboobacker Haji dated June 7, 1975, and also the unexplained cash difference as on April, 17, 1974, amounting to Rs. 4 lakhs. After adverting to these facts, the Appellate Tribunal held :