COMMISSIONER OF INCOME TAX Vs. SATISH MEDICAL AGENCIES

JUDGEMENT

(1.) The Income-tax Appellate Tribunal, New Delhi, has referred the following question of law under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the opinion of this court :

(2.) The reference relates to the assessment year 1979-80. The facts giving rise to the present reference are that the respondent is a dealer in medicine. On October 25, 1979, there was a search on the business premises of the respondent as well as on the residential premises of its partners. During the search certain purchase vouchers were found which were not recorded in the regular books of account. Similarly, certain papers were found which showed that some sales had also not been recorded. During the course of the assessment proceedings the Income-tax Officer took recourse to the proviso to Section 145 of the Act and estimated the assessee's income by estimating its sales at Rs. 10 lakhs as against Rs. 9,09,710 and applying the G. P. rate of 10 per cent. The income finally after appeal effect came to Rs. 64,469 as against the disclosed income of Rs. 32,285.

(3.) The assessing authority initiated penalty proceedings under Section 271(1)(c) of the Act and after hearing the respondent, he imposed a sum of Rs. 20,000 as penalty. The order was sustained by the Appellate Assistant Commissioner to the extent of Rs. 6,822. Feeling aggrieved by the said order, the Revenue preferred an appeal before the Tribunal. The Tribunal has dismissed the appeal.