B MUNIAPPA GOUNDER Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference is common to three assessment years, viz., 1958-59, 1959-60 and 1960-61. There are two questions which arise for consideration, viz. :-- "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in sustaining concealment penalty of Rs. 18, 000, Rs. 21, 000 and Rs. 25, 500 in respect of the assessment years 1958-59, 1959-60 and 1960-61 ? and(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the levy of penalty under section 271(1)(c) of the Income-tax Act, 1961, in respect of assessment year 1958-59 and under section 28(1)(c) of the Indian Income-tax Act, 1922, in respect of the assessment years 1959-60 and 1960-61 was not illegal ?" *The second question is more easily answered and, therefore, we take it first for consideration. For the assessment year 1958-59, the original assessment was completed on March 31, 1959, under the Indian Income tax Act, 1922. On the basis of some information that the assessee had not properly accounted for the investment in a bus and in a building, the assessment was reopened and completed under section 147 of the Indian Income-tax Act, 1961, on June 29, 1963. Section 297(2)(g) of the Act provides that any proceeding for the imposition of a penalty in respect of any assessment completed on or after 1st day of April, 1962, could be initiated and completed under the Act of 1961. The Income-tax Officer, therefore, referred the question of levy of penalty for this year to the Inspecting Assistant Commissioner, who levied penalty of Rs. 24, 000.

(2.) THE objection of the assessee before the Tribunal to the penalty proceeding being taken under the Act of 1961 did not succeed. THE first question in so far as it relates to the assessment year 1958-59 thus raises the validity of the levy of penalty under section 271(1)(c) of the Income-tax Act of 1961. THE answer to this question is concluded by the decision of the Supreme Court in Jain Brothers v. Union of IndiaFor the assessment years 1959-60 and 1960-61 the relevant assessments were made under the Act of 1922 on March 30, 1962. Under sec tion 297(2)(f) of the Act, any proceeding for the imposition of a penalty in respect of any assessment completed before the 1st day of April, 1962, could be initiated and completed under the Act of 1922. THErefore, the legality of the levy of penalty under section 28(1)(c) of the Indian Income-tax Act, 1922, for those two years cannot be validly disputed. THE second question is, therefore, answered in the affirmative and against the assesseeWe now turn to the first question. THE assessee is an individual running a petrol bunk at Coimbatore and a bus service in Mysore State in the name of M.G.S. Motor Service. He is also a partner having a half share in the firm of M/s. B.L.S. Motor Service at Coimbatore. He put up 16 houses in what is known as "R.M.S. Colony" in Cowly Brown Road and Bashyachari Street in R.S. Puram.

(3.) TAKING the assessment year 1958-59, the Income-tax Officer found that out of Rs. 1, 25, 000 to be accounted for there were resources available to the assessee to the extent of Rs. 95, 426 in the shape of, (a) drawings in the several accounts, (b) income from the own bus as per the income-tax assessment and (c) agricultural income (estimated) and rental income. In the assessment there was another sum of Rs. 18, 100 which was also the subject of consideration. As it has been deleted on appeal by the Appellate Assistant Commissioner, we have not made any reference to it. After adjusting the sum of Rs. 95, 426 available to the assessee against Rs. 1, 25, 000 the balance left to be explained was Rs. 29, 574. It is this amount which was added in the assessment for that yearFor the assessment year 1959-60, the expenditure allocated towards the construction of the house was Rs. 1, 20, 000. The Income-tax Officer has estimated the bus service income in Mysore at Rs. 36, 000 out of which Rs. 20, 000 had been credited in the account of M/s. B.L.S. Motor Service at Coimbatore. He took the balance of Rs. 16, 000 as available to the assessee. He took into account also the drawings of Rs. 66, 650. The total amount thus found to be available with the assessee was Rs. 82, 650.