INDIAN BUILDERS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE petitioner is a registered firm and is an assessee under the Income-tax Act. THE petitioner submitted returns for the assessment year 1990-91 declaring a total income of Rs. 95,760. On January 17, 1992, they filed a revised return showing an income of Rs. 3,50,660.

(2.) THE Deputy Commissioner of Income-tax, vide annexure 1, made assessment of the income taking into consideration both the returns and fixed the net profit at 10 per cent. of the gross receipts amounting to Rs. 14,30,550 without giving the necessary depreciation rebate which was being given every year. THE petitioner filed an appeal before the Commissioner of Income-tax (Appeals) challenging the aforesaid order. THE appeal was dismissed on June 29, 1992. THE petitioner then preferred an appeal before the Income-tax Appellate Tribunal and that appeal was pending before the Tribunal. A complaint was filed against the petitioner for prosecution for having committed offences under Sections 276C and 277 of the Income-tax Act. THE complaint was filed in the Court of Special Judicial Magistrate (Economic Offences), Jamshedpur. THE gravamen of the accusation in the complaint petition is as follows :

(3.) IN the present case, the assessment order was made under Section 143(3)/182(1) of the INcome-tax Act. IN the original return, the assessee declared a total income of Rs. 95,760. During the course of assessment proceedings, the assessee filed a revised return showing an income of Rs. 3,50,660. Both the returns were processed under Section 143(1)(a) and thereafter it was selected for scrutiny after obtaining the prior approval of the Commissioner of INcome-tax, Ranchi. Notice under Section 143(2) was issued on March 14, 1991. On March 20, 1991, the assessee was advised to produce its books of account. He was asked to attend on March 27, 1991. But despite opportunities, accounts were not produced. The assessee had shown a loss of Rs. 6,18,581 for the current assessment year giving no explanation for the loss. The assessee was directed to show cause as to why profit would not be taken at 10 per cent. of the gross receipt. The assessee had debited Rs. 90.17 lakhs to the wage account. At the end of the year, there were general entries by which an amount of Rs. 52 lakhs had been debited as expense payable for the year. No vouchers were shown for the full period. The Deputy Commissioner held that the petitioner had deliberately not produced the complete set of books despite enough opportunities being given. His income was assessed at Rs. 14,30,551 (taking 10 per cent. of the gross receipt). The Deputy Commissioner directed penalty proceeding under Section 271(b) to be initiated. The Commissioner of INcome-tax upheld the assessment order for the reasons mentioned in paragraph 3 of his order (annexure 2).