COMMISSIONER OF INCOME TAX Vs. RAMCHANDRA B D

JUDGEMENT

(1.) TWO questions are referred to the High Court at the instance of the Revenue in this reference under s. 256(1) of the IT Act.

(2.) THE questions arise in respect of the asst. year 1968 69, the previous year being S.Y. 2023. The assessee is a registered firm engaged in the manufacture and purchase and sale of utensils. For the relevant year it filed a return showing an income of Rs. 9,548. The ITO, however, determined the assessee's income for that year at Rs. 75,170. He found upon examination of the accounts that the assessee had made large purchases without a corresponding increase in the turnover. He also found that the accounts were not complete and that though there were wholesale transactions no quantity account was maintained nor were other details available by recourse to which wholesale transactions could be separated from retail transactions. He also found that there was no plausible explanation for the fall in the assessee's gross profit margin. Upon the basis of his determination of the total income at Rs. 75,170, the ITO initiated action for the imposition of a penalty under the provisions of S. 271(1)(c) of the Act and the minimum penalty leviable being in excess of Rs. 1,000, he referred the matter to the IAC.

(3.) BEFORE the IAC in the penalty proceedings, the assessee was given an opportunity of hearing. It was submitted on his behalf that there was no concealment of income nor had any inaccurate particulars been furnished. The IAC held that the assessee had furnished inaccurate and incomplete details of income and had wilfully neglected to furnish relevant particulars. He observed that the assessee had not maintained his accounts in a manner it should have done and that his balance sheet showed discrepancies. He, therefore, imposed upon the assessee a penalty of Rs. 32,140 being the minimum imposable.