COMMISSIONER OF INCOME TAX Vs. ROSE LOCK FACTORY

JUDGEMENT

(1.) This is a reference under Section 256(2) of the Income-tax Act, 1961 (for short, "the Act"), for the assessment year 1968-69. The Income-tax Appellate Tribunal has referred the following questions :

(2.) The facts, as briefly stated, are that, during the accounting year relevant to the assessment year 1968-69, which ended on March 31, 1968, the assessee obtained an import licence for import of nickel anodes and for that two bills were made, one of them was in the name of Messrs. James Greaves and Co., Manchester (U.K.) for 1,482 and another in the name of Bohler Brothers and Co. Ltd. of Vienna for 2,494. The amounts of these two bills in Indian currency worked out to Rs. 30,863. Admittedly, these goods were not received by the assessee during the relevant accounting year, but in April, 1968, the Income-tax Officer observed that the assessee had paid Rs. 8,500 to Messrs. Dadabhoy Hormusjee and Sons Ltd. of Bombay towards clearing, forwarding and shipping charges ; this amount was paid in February, March, 1968, and was then entered in the books of account of the assessee on March 13, 1968. The assessee then debited to the goods account the entire amount of Rs. 39,363 (30,863 + 8,500), but in drawing up the profit and loss account, the assessee failed to include the value of the abovementioned goods in the closing stock. However, when the assessee was asked to explain, it immediately filed a revised return in which the income with reference to the original return was increased by Rs. 30,863, while the amount of Rs. 8,500 paid to Messrs. Dadabhoy Hormusjee and Sons Ltd. was not included even at that stage.

(3.) The Inspecting Assistant Commissioner, therefore, initiated penalty proceedings in regard to the total amount of Rs. 39,363 and eventually levied penalty under Section 271(1)(c) of the Act in the amount of Rs. 50,000.