INCOME TAX OFFICER Vs. GEETA DEVI AND OTHERS

JUDGEMENT

(1.) Complainant - Income Tax Officer,Ward-1(3), Bathinda had filed a complaint under Sections 276 C and 277 read with Section 278 B of Income Tax Act, 1961 (hereinafter referred to as the Act) against M/s Sharma Misthan Bhandar and others on the allegations that accused had been drawing considerable income by sale of sweets, meals and other eatables running their business under the name and style of M/s Sharma Misthan Bhandar situated at The Mall, Bathinda; that such concern had filed return of income tax for the assessment year 1987-88 at Rs.64,720/- on 27.7.1987 duly signed and verified by accused Pardeep Kumar as partner of the firm; that statement was accompanied by the statement of computation of income for the year ending 31.3.1987 along with four challans of tax, total amounting to Rs.4,708/- as well as Form No.12 i.e. for making declaration under Section 184(7) of the Act for continuation of registration of the firm; that the income was processed under Section 143(1) of the Act and the return of income was accepted, however, subsequently on perusal of the documents attached with the return Assessing Officer found that certain new credits had been introduced, therefore, with the prior permission from the Deputy Commissioner, Income Tax, Bathinda Range, Bathinda, the Assessing Officer reopened the assessment under Section 143(2)(b); that when permission was granted, notice dated 30.3.1989 and 9.5.1989 under Sections 142(1) and 143(2) were issued to accused to produce evidence in support of the return i.e. all books of the account, purchase and sale of vouchers, pass books details of the new cash credit introduced during the year; that during the course of assessment, accused Pardeep Kumar along with his Accountant and Advocate attended the proceedings and produced the account books before the Assessing Officer, which were examined and it was found that the purchase of empty card board boxes had not been accounted for in the books of account; that as regards the card board boxes, it was admitted that those were included in weight of the sweets at the time of the sale and the sales were not vouched and no day to day stock register was maintained and bill books were also not maintained, therefore, the accused had intentionally created such circumstances to enable itself to evade the tax and penalty chargeable and imposable under the Act, therefore, proviso of Section 145(1) was made applicable and the sales were estimated at Rs.6,50,000/- against the declared sales of Rs.5,07,724/- and the gross profit at 45% was applied as against 41.43% shown in the return; that according to return of the income, the assessee had introduced new cash credits as under:

(2.) Those cash credits were found to be bogus. The Assessing Officer vide order dated 11.7.1989 required the Assessee to produce Savitri Devi and Geeta Devi, however, they failed to put in appearance. In the reply filed, it was stated by Geeta Devi and Savitri Devi, that the creditors were not inclined to come in the Court since that was prohibited by their customs. The Assessing Officer deputed the Inspector to record the statement of the accused Nos.4 and 5 at their residence and their statements were recorded on 28.7.1989, from the perusal of which, the Assessing Officer find that they could not earn the net income of Rs.18,200/- from their respective jobs and credits were found to be bogus, in that way amount of Rs.8500/- and Rs.5,000/- belongs to accused No.1 and these credits had been shown to deflate the income and with intent to evade the tax and penalty chargeable and imposable under the Act, as such, the said amount was added to the income of accused No.1. Geeta Devi is said to be wife of Pardeep Kumar and Savitri Devi is wife of Som Dutt, partners of the firm. Accused Nos. 4 and 5 had assisted the accused firm in evading the tax, penalty, chargeable and imposable by giving false affidavits and statements of account knowingly it to be false, thus committing offence under Sections 276 C and 278 of the Act. Penalty proceedings under Sections 271 (1)(c) and 273(2)(a) were ordered to be initiated. Accused was aggrieved by the order dated 31.7.1989 passed by the Assessing Officer and preferred an appeal, which however, upheld the addition made on account of cash credits i.e. 13,500/- and 6,000/- on account of sale of bardana. Accordingly it was so done. Departmental proceedings of assessment in the income tax office had been going on.

(3.) On a complaint having been filed, accused were summoned and they put in appearance and admitted to bail.