COMMISSIONER OF INCOME TAX Vs. V GOPALAN

JUDGEMENT

(1.) IN these tax case petitions, the Department requests this court to direct the Tribunal to refer the following common question of law, for the assessment years 1980-81, 1981-82 and 1982-83, for the opinion of this court, under section 256(2) of the INcome-tax Act, 1961 (hereinafter referred to as the "Act") ? "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in cancelling the penalty levied under section 271(1)(c) of the INcome-tax Act, 1961 ?" * The assessee is an individual, carrying on tailoring business. For the assessment year 1980-81, he filed his return of income, admitting a total income of Rs. 20, 873 and the original assessment under section 143(3) of the Act was completed on a total income of Rs. 26, 170. For the assessment year 1981-82, the returned income was Rs. 29, 550 and the original assessment under section 143(3) was made on a total income of Rs. 31, 590. On October 5, 1992, the Department conducted search proceedings under section 132 of the Act in the premises of the assessee. IN the course of the proceedings, incriminating documents including the order books and collection chittai were seized and they revealed large scale suppression of tailoring receipts. Reassessment proceedings were taken for the assessment years 1980-81 and 1981-82 under section 147(a) of the Act by issuing notice under section 148 to bring to tax the escaped income in respect of suppression of receipts from tailoring business and other investments. IN response to the notices, the assessee filed returns of income showing a total income of Rs. 48, 810 including a sum of Rs. 27, 644 admitted as income from other sources for the assessment year 1980-81 and a total income of Rs. 60, 570 including Rs. 27, 676 admitted as "income from other sources" for the assessment year 1981-82.

(2.) THE assessments were completed for the assessment years 1980-81 and 1981-82 on a total income of Rs. 1, 84, 960 and Rs. 2, 34, 140, respectivelyIn the reassessments, additions were made not only in respect of various investments including investments in the names of his family members. For the assessment year 1982-83, the assessee filed a return disclosing a total income of Rs. 32, 170 and the regular assessment was completed on a total income of Rs. 5, 06, 290. As a result of the appellate orders, the total income for the three assessment years involved herein were reduced as underAssessment year Income determined in the appeals(Rs.)1980-81 1, 20, 4801981-82 1, 64, 2101982-83 2, 80, 850In the course of the reassessment proceedings, the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act for all the three assessment years. Considering the relief allowed by the Commissioner (Appeals) and the Tribunal and after affording an opportunity of being heard to the assessee, the Assessing Officer levied under section 271(1)(c) of the Act penalties for these three assessment years. Against the penalty orders, the assessee filed appeals to the Commissioner of Income-tax (Appeals).

(3.) THE seized materials brought to light that there was systematic suppression of tailoring receipts in various years. But for the search operation, the omission to account for the tailoring receipt could not have been detected. THE assessee himself had admitted the omitted collection would be Rs. 40, 383 as against Rs. 50, 000 estimated by the Assessing Officer in the appeal before the Commissioner of Income-tax (Appeals). In the quantum proceedings, the Commissioner of Income-tax (Appeals) categorically held that there was suppression of tailoring receipts and addition was made thereon. It cannot be said that the estimate was made with regard to the suppressed tailoring receipt without materials. Inasmuch as a question of law does arise out of the order of the Tribunal, a statement may be called for from the TribunalOn the other hand, Mr. T. C. A. Ramanujam assisted by R. Srinivasan and T. C. A. Sangeetha, learned counsel appearing for the assessee, submitted that whatever happened prior to the calling of the remand report by the Tribunal would be of no relevance. THE remand report clearly shows that the tailoring receipts related to earlier years and the entire receipts do not relate to the assessment years under consideration.