INCOME-TAX OFFICER Vs. B B MITTAL

JUDGEMENT

(1.) A complaint against the firm, M/s. D. D. Mittal and its partners (accused), was filed by the Income-tax Officer, Barnala, on March 17, 1986, under Section 276c read with Section 277 of the Income-tax Act and Sections 193 and 196 of the Indian Penal Code on the following allegations : On January 20, 1978, the concerned Income-tax Officer conducted a survey under Section 133a of the Income-tax Act, 1961 (hereinafter referred to as " the Act"), in the premises of the assessee-firm and, during that process, found excess stock of the value of Rs. 23,445 lying there and, held that the assessee had, as such, suppressed the purchases of stock of cloth of the aforesaid value and had made investment in purchases from income from undisclosed sources. The Income-tax Officer further prepared an inventory of the closing stock. It was further alleged in the complaint that, in the return for the year 1978-79, a total income of Rs. 29,630 was declared by the firm. With these facts before the income-tax authorities, an opportunity was given to the firm and its partners to reconcile the difference between the closing stock found on physical verification and checking duly shown in* the account books of the assessee. The assessee did not respond to the opportunity offered and thereupon a show-cause notice for adding the amount of Rs. 23,445 was issued to the firm in its income but still no explanation was given by the accused-firm or its partners. The assessment was made by the Department under Section 145 of the Act showing the total income at Rs. 53,074 which included the aforesaid amount of Rs. 23,445 on account of suppression of stock. Further action under Section 271 (1) (c) was also initiated by issuing a penalty notice for having concealed the income. The assessee-firm went in appeal against the addition made by the Income-tax Officer and the appellate authority/ Assistant Commissioner dismissed the appeal, vide order dated May 19, 1982, and confirmed the addition made by the Income-tax Officer. The assessee filed a further appeal before the Income-tax Appellate Tribunal, Chandigarh, Patiala Range, but that also did not succeed. Thereafter, penalty of Rs. 13,870 was imposed by the Income-tax Officer under Section 271 (1) (c) of the Act, vide its order dated October 26, 1982. The assessee again approached the Appellate Assistant Commissioner through a statutory remedy of appeal against the order of penalty imposed but the imposition of penalty was maintained. It is further alleged in the complaint that Shri Banke Bihari, partner of the firm, had made a false statement in the verification in the report as required under the provisions of the Act and the rules framed thereunder and, as such, the accused deliberately furnished an untrue verification and had delivered a false account and thus an offence under Sections 277 and 276c has been committed by the partnership (registered firm) by intentionally fabricating false evidence in the shape of bogus account books for being used in the income-tax assessment proceedings. In the complaint, it is also stated that offences under Sections 193 and 196, IPC, are also made out.

(2.) THE complaint having been filed by an Income-tax Officer in his official capacity, his statement was not recorded and the accused were summoned. On putting in appearance before the court, the accused moved an application on the ground that the penalty imposed on the firm by the Income-tax Officer, Barnala, had been quashed by the Income-tax Appellate Tribunal, Chandigarh, vide its order dated April 29, 1986, and that the accused had not concealed any income and they had not filed any false return. It was also alleged in the application that the Income-tax Officer, Barnala, had already complied with the order of the appellate authority and had issued refund order of the penalty amount imposed by him. This application was contested by the complainant, Income-tax Officer, Barnala, on the ground that though the order of the Income-tax Officer dated October 26, 1982, imposing penalty of Rs. 13,870 has been set aside by the Appellate Tribunal, Chandigarh, yet the Revenue was contemplating to file an appeal against that order. The trial court gave ample time to the complainant to produce any document or any order showing that any appeal had been preferred but, in spite of ample opportunities granted, no such material was placed before the court.

(3.) THE trial court heard counsel for the parties at length. The order of the Appellate Tribunal, Chandigarh, dated April 29, 1986, was perused wherein a positive finding had been recorded that there was no concealment of any income. The explanation given by the assessee had been opined to be bona fide and the Income-tax Officer's order imposing penalty was quashed. In support of its view, the trial court placed reliance on the authority reported as Parkash Chand v. ITO [1982] 134 ITR 8 (P and H) and, accordingly, the complaint was ordered to be dismissed. Against this order of dismissal dated May 22, 1987 of the trial Magistrate, the complainant filed an appeal in this court which was admitted by a Division Bench of this court, vide order dated December 11, 1987. Now, vide this judgment, the appeal is being disposed of finally.