ITA No. 137(Coch.)/1994: This is an appeal by the assessee directed against the order of the learned Commissioner (Appeals) in confirming the penalty of Rs. 5,000 levied under section 272A(1)(c) of the Income Tax Act, 1961, relating to the assessment year 1990-91, under appeal. - (1.)
(2.) The assessee is in the field of manufacture of tiles. An Inspector of the Income Tax Department visited the business premises of the assessee on 7-8-1991, as a part of the assessment proceedings. The Inspector verified the books of account maintained by the assessee. He noticed certain entries relating to purchase of clay, fire wood, etc., noted in the rough cash books. He also noticed that these entries were omitted to be entered in the fair book by the assessee for the purpose of assessment which was meant for production before the Income-tax authorities. After identifying the lapses in the rough book and the fair book, the Inspector using his powers of identification, left the two books after placing marks of identification. Thereafter, a summons under section 131 was issued to the assessee on 9-8-1991 to produce all the books of account maintained by it as a part of the assessment proceedings. The assessee produced the books of account, except the rough cash books, where the Inspector had left his identification marks after examining the books during his visit on 7-8-1991 at the business premises of the assessee. A show-cause notice was issued to the assessees managing director on 19-8-1991 asking his explanation as to why penalty under section 272A(1)(c) of the Income Tax Act, 1961 should not be levied for the assessee's failure to produce the books of account as contemplated under section 131(1)(c) of the Act. The matter was referred to the Deputy Commissioner, Trichur Range, Trichur, by the Assistant Commissioner, Circle-1, Division-1, Trichur, along with the reply filed by the assessee. Another opportunity was extended to the assessce on 10-10-1991, when the managing director of the assessee-company along with the assessee's authorised representative appeared before the assessing officer. The managing director explained that he rarely goes to the assessee-company and he has no first-hand knowledge of the books of account, other than those produced before the Assistant Commissioner. It was further submitted by him that even after a thorough search at the business premises, the rough cash books purported to have been signed by the Inspector could not be traced. Hence the managing director expressed his inability to produce the two rough cash books for verification. Since the explanation was not satisfactory, and the assessee could not also produce the rough cash books on which the Inspector put his marks of identification, the assessing officer held that the assessee's intention is clear and motivated as the production of these two books before the income-tax authorities would land the assessee in serious problem of detection of concealment. In the light of the above facts, the assessing officer levied the impugned penalty against the maximum of Rs. 10,000 specified in the Act. Aggrieved by the levy of penalty, the assessee approached the learned first appellate authority.
(3.) IT was contended before the learned first appellate authority that the staff members of the assessee were not aware of what the Inspector was doing during his visit to the business premises of the assessee and that they did not notice the Inspector signing anywhere. The assessee was maintaining whatever books or records that were statutorily required to be maintained by the assessee-company under section 44AA(2)(ii) of the Income Tax Act, 1961 and the assessee has produced all the papers, books that were in its custody in response to the summons. There was no fact warranting levy of penalty under section 272A(1)(c). The mere statement of the Inspector of income-tax that he had seen some discrepancies in the figures is a vague statement without any corroborative evidence, which is not to be taken cognizance of by the assessing officer to levy the penalty.;