Law: Income Tax Act, 1922

Section: 28(1)(c)

Income-tax Act (XI of 1922)---S. 28(1)(c)-Penalty-Concealment of income-Addition made to total income and further penalty levied for concealment of income-Cancellation of penalty by Tribunal for reasons that though addition was justified yet there was no evidence of concealment of income-Finding neither perverse nor , based on no material-Valid in law. JUDGMENT SABYASACHI MUKHARSI, J.-In this reference under section 66(2) of the Indian I.T. Act, 1922, as directed by this court, the following question has seen referred to us : "In the facts and circumstances of the case, was the Tribunal justified in drawing the inference that no concealment was established in respect of the sum of Rs. 1,73,678 and that no penalty was justified ?" It appears that this reference relates to the assessment orders for the assessment year 1948-49 and is arising out of the penalty under section 28(I)(c) of the Indian I..T: Act, 1922. The assessee is a company and it was carrying on business in the manufacture of jute goods. During the relevant previous year it purchased a substantial quantity of jute at its Bhairab agency The I.T.O. found that the average purchase rate at such agency was Rs. 30.5 annas per maund as against the average market price of Ra. 29-7-3 pries per maund. In proof of the purchases the assessee produced only a register that was maintained at Bhairab, but bill and voucher were not produced. The I. T. O. held that the assessee had inflated the purchases of jute at Bhairab and for such inflation he added a sum of Rs. 1,73,678 in the assessment. The A.A.C., on appeal, deleted the addition. But this was restored by the Tribunal in second appeal. Holding that the assessee had deliberately inflated the purchases of raw jute at Bhairab Agency in order Produce its tax liability and that the assessee had concealed the particulars of its income or deliberately furnished inaccurate particulars of its income, the I. T- O. imposed a penalty of Rs. 70,000 under section 28(1)(e) of Indian I.T. Act, 1922. The assessee thereafter appealed to the A.A.C. The A.A.C. observed that…

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