COMMISIONER OF INCOME TAX Vs. CHANDRA VILAS HOTEL

JUDGEMENT

(1.) Mr. B.B. Naik, learned counsel for the Revenue. None for the assessee, though served.

(2.) Present is a Reference under Section 256(1) of the Indian Income Tax Act by the Income Tax Appellate Tribunal, Ahmedabad Bench 'A', at the instance of the Revenue on the following question for our opinion; 'Whether the Appellate Tribunal is right in law and on facts in cancelling the penalty levied u/s. 271(1)(c) of the Act when no correct and complete accounts were maintained and the book results had been rejected from year to year and substantial additions made were accepted by the assessee and that inspite of this the assessee persisted in maintaining the books of account in the same way ?'

(3.) The short facts, leading to the present Reference, are that the assessee who is in the hotel business, for the accounting year 1967-68, submitted its returned income, the I.T.O. noted that the assessee had disclosed the total sales of Rs. 19,55,651/- as compared to Rs. 17,70,504/- for the earlier year but the gross profit was reduced to 24% in comparison to 31.6% for the last year. He also found that the manner in which the accounts were maintained the income could not be properly estimated and while doing so he also observed that the Auditors of the assessee had clearly observed that" for the check income or for the test income of the particular day the required slips were not produced before the Auditors. The Assessing Officer held that the income was not properly returned, he accordingly applied Section 145(1) of the Indian Income Tax Act, and assessed the income by adding 20% more to the returned income. The fact of addition was not disputed by the assessee and it felt content with the said order.