THAKUR Vs. CIT

JUDGEMENT

(1.) IN this INcome-tax Case, the assessee is seeking under S. 256(2) of the IT Act, 1961 (43 of 1961), for short "the Act", a direction to the Tribunal to state the case on the following questions :

(2.) THE facts found by the Tribunal are that the assessee, an individual, was an honorary Secretary of the Andhra Pradesh State Council of Child Welfare Fund and Viswabharathi Socio Cultural League. He filed a return as individual for the asst. yr. 1971-72 relevant to the accounting year ending on 31st March, 1971, declaring his income as Rs. 30,000, being the remuneration received from the above institutions. In his capacity as secretary of the Andhra Pradesh Welfare Fund, he conducted several raffles and the 13th raffle was drawn on 15th Nov., 1970. THE first prize winning ticket bearing No. Y 400760 was won by Sri Mattaparthi Sriramulu of Vanapalli village of East Godavari District. THE said Sriramulu took the services of Sri L. Malakondaiah, the District Collector, and approached the assessee for payment. It is the case of the Revenue, that the assessee paid a sum of Rs. 2,50,000 to the winner, M. Sriramulu, on 18th Nov., 1970, and sold the ticket to Kumari Alpana, daughter of one Dr. Mohanlal Peermal, a mill owner of Bombay, for Rs. 3,50,000. Similarly, the ticket bearing No. Y 934608 which won the second prize of Rs. 25,000 was won by one M. Shankaraiah of Seetharampuram, Jangaon taluk of Warangal District. When he approached, the assessee purchased the ticket for Rs.21,000 and sold it to one Shri Chunilal Vyas for Rs.28,000. On a complaint laid for offences under ss. 409 and 420 of the Indian Penal Code, the police investigated into it and it revealed that the assessee had the services of one Shri Diwakar Setty, paid him Rs. 5,000 and got sold the first prize ticket to Kumari Alpana and thereby he made a profit of Rs. 95,000. With regard to the second ticket, he purchased it for Rs. 21,000 and sold it for Rs. 28,000 and thereby he earned Rs. 7,000 as profit. He did not disclose the source of Rs. 21,000 and thereby he concealed an income of Rs. 1,23,000. That amount was added to the income returned by the assessee. THE assessee disputed the same. But the Tribunal found as a fact that the assessee earned an income of Rs. 95,000 and Rs. 7,000 on the first and second prize tickets in the 13th raffle and did not disclose the source of Rs. 21,000 and he did not account for Rs. 1,23,000 and accordingly it was added. THEreafter, proceedings under S. 271(1)(c) of the Act, (viz., penalty proceedings), were initiated against the assessee. In the first instance, when an explanation was sought for, it would, appear that Sri S. Ramamohan Rao, chartered accountant, filed vakalath on behalf of the assessee and he stated that nothing more was to be added to what was urged before the appellate authorities during the assessment proceedings. On that basis, the IAC considered the matter and imposed a penalty of Rs. 2,46,000. On appeal, the Tribunal, by order dt. 16th Aug., 1977, called for a finding from the IAC and the IAC after giving opportunity to both parties to adduce evidence-both oral and documentary-submitted his report on 1st June, 1978. THEreafter, the Tribunal considered the appeal on merits and held that the assessee had concealed an income of Rs. 1,23,000, but, however, it reduced the penalty to Rs. 1,23,000. THE assessee sought for reference on the above questions in addition to two more questions. THE Tribunal found that questions Nos. 1 and 2 mentioned in para 7 of the statement of the case (R. C. No. 30 of 1980-Thakur V. Hari Prasad vs. CIT(1987) 63 CTR (AP) 132 : (1987) 167 ITR 603 (AP) : TC 50R. 892) alone raise questions of law and accordingly made a reference on questions Nos. 1 and 2 in R. C. No. 30 of 1980 Thakur V. Hari Prasad vs. CIT (supra)--(which is just now disposed of) and refused to make a reference on questions Nos. 3 to 5 and additional question. Accordingly, this application came to be filed.

(3.) IT is true that the mere finding that the assessee has not returned the correct income during the proceedings of the quantum appeal by itself is not conclusive. But the totality of the circumstances including the findings recorded in the assessment proceedings are good and relevant evidence and have to be taken into account including the conduct of the assessee in concealing the income. Even the false explanation offered by the assessee also is a relevant circumstance telling against the assessee. In R. Srinivasan & Co. vs. CIT (1974) 97 ITR 431 (Mad) : TC50R.1461, it was held (headnote):