Law:

Section:

Section 16, read with sections 7 and 13 of the Excess Profits Tax Act, 1940 - Penalties - Assessment year 1945-46 - Whether where an assessee is found to have been guilty of an act or omission as mentioned in section 16, provision in section 16 rendered him liable only if there was escape from excess profits tax liability - Held, yes - Whether expression "deemed to be reduced" as used in section 7 implies that at least for purposes of giving relief in respect of excess profits tax, amount of profits for previous chargeable accounting periods were to be taken as having been even originally reduced amounts, so that larger amounts determined in earlier assessment proceedings become quite ineffective - Held, yes - Whether for purposes of section 16, amount of excess profits tax payable or amount of excess profit tax which would have been avoided must be determined with reference to ultimate liability of assessee determined after taking into account all provisions of Act including section 7 - Held, yes - Whether where whole excess profit tax for chargeable accounting period in question was refunded in following chargeable accounting period before order of imposition of penalty was passed by EPTO, there was no avoidance of excess profits tax and no penalty could legally be imposed under section 16 in respect of the chargeable accounting period in question - Held, yes Words and Phrases: Expression 'deemed to be reduced' as occurred in section 7 of the Excess Profits Tax Act, 1940. Expression 'the amount of excess profits tax payable' as occurring in section 16 of the Excess Profits Tax Act, 1940. FACTS For the chargeable accounting period, the assessee had shown a profit in his excess profit tax return and had not included therein two deposits, one in the account of 'M' and another in account of 'L'. The EPTO added amount of those two deposits in the income of the assessee on the ground that those were concealed income of the assessee. He also initiated proceedings under section 16 and impose penalty on the assessee. The Tribunal held that as the assessee had passed fictitious entries in his account disguising his own deposits as the deposits of the third party, he…

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