SMT Vs. KANAKAMMAL V INCOME-TAX OFFICER

JUDGEMENT

(1.) These appeals are directed against the imposition of penalties under section 271(1) (c) of the Income-tax Act, 1961.

(2.) The assessee is an individual. For the assessment years 1976-77 and 1977-78, corresponding to the previous years ended 31-3-1976 and 31-3-1977, the assessee filed returns on 30-12-1976 and May 1978 respectively showing total income of Rs. 33,716 and Rs. 52,477. This include income from bus and lorry business amounting to Rs. 18,100 and Rs. 38,607 respectively. Subsequently there was a search in the premises of the assessee on 6-6-1978 when certain registers were found and they disclosed daily collections from the bus and lorry quite at variance from the day book and ledger on the basis of which the assessee had admittedly prepared the returns. The Income-tax Officer proposed to add the difference but the I. A. C. gave direction under section 144B taking into account some undisclosed expenditure also whereby the income from the business was determined at Rs. 60,513 and Rs. 1,01,685 respectively. On appeal the CIT (Appeals) granted some further relief. On these facts the ITO was of the view that the assessee had concealed income from business and the other sources also in respect of which additions were made and imposed penalties under section 271(1) (c). The assessee appealed and argued that since the income was only estimated the assessee could not be considered to have concealed any income. However, the CIT (Appeals) was of the opinion that even the estimate was made on the basis of the books seized and, therefore, the assessment of the suppressed income led to the finding of concealment in respect of which penalty was exigible. Nevertheless he reduced the penalty to the minimum imposable in respect of the income concealed with regard to the income from business only since he found that there was no concealment with regard to the other source of income.

(3.) In the further appeal before us it was contended on behalf of the assessee that the books of the assess were admittedly unreliable and, therefore, when an assessment was made on estimate by rejecting the books, there could not be any finding of concealment in that regard. We are unable to accept this contention because admittedly the income returned was itself not an estimate but only that based on the books which were found to be fudged. In fact when the assessee filed a revised statement of income after the search it was stated.