HASMUKHLAL AMBARAM JARIWALA Vs. INCOME TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
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B.L. Chhibber, Accountant Member -
(1.) THIS appeal by the assessee is directed against the order of the CIT (Appeals), Surat confirming penalty of Rs. 70,000 under Section 271(l)(c).
(2.) The assessee, an individual, derived share income from two registered firms, viz., M/s. Motiram Roopchand and M/s. United Jari Industries. He was also director of M/s. Laxmi Oil Extraction Pvt. Ltd. and was getting remuneration from the said company. The assessee filed return of income on28-6-1975 declaring only the share income from the firm M/s. Motiram Roopchand and salary income of Rs. 9,000 from the said company. He did not declare the share income from the firm M/s. United Jari Industries and the remuneration from M/s. Laxmi Oil Extraction Pvt. Ltd. On 1-3-1978, the ITO, Central Circle 1, Jaipur who then had jurisdiction over the case pointed out this lapse to the assessee. The assessee admitted the lapse and offered the share income from M/s. United Jari Industries and remuneration derived from M/s. Laxmi Oil Extraction Pvt. Ltd. for assessment.
During the course of assessment proceedings, the learned ITO in addition to the above two amounts offered by the assessee added a further sum of Rs. 11,380 on account of low withdrawals for household expenses. The ITO initiated penalty proceedings under Section 271(l)(c). In response to the show-cause notice, it was submitted before the ITO that the share income from M/s. United Jari Industries and remuneration from M/s. Laxmi Oil Extraction Pvt. Ltd. had not shown in the return through inadvertence and that the addition on account of low withdrawals for household expenses was based on estimate and hence no penalty was leviable. Rejecting the contentions the learned ITO levied the impugned penalty.
(3.) ON appeal, the CIT (Appeals) confirmed the action of the learned ITO observing inter alia as under :
From the facts narrated above, it is clear that the assessee failed to disclose his income from partnership share profits, although it was a fact that he was an active partner. Similarly, the assessee failed to disclose remuneration received by him from M/s. Laxmi Oil & Extraction Mills Pvt. Ltd. of which he was a director. What this shows? It is clear that - assessee consciously concealed substantial income (Rs. 40,126 as share profits from M/s. United Jari Industries and Rs. 18,000 as director's remuneration from the above Ltd. Co.). With a view to devoid the revenue from due amount of tax which otherwise would have become payable on filing of the return of income and correct income had been declared. Thus, it is clear that mens rea was present in the conduct of the assessee. As held by the Gujarat High Court in case of I.M. Patel& Co. (107 ITR 214) the penalty is leviable whose mens rea is present in the conduct of the assessee in concealing income and furnishing inaccurate particulars of such income. The totality of circumstances also point to the concealment of income by the assessee. A person who was an active partner in the firm cannot ignore that he was not aware of the income accruing to him from the said partnership business. Similarly, a person, who was a director of the Ltd. Company could not say that he was not aware of remuneration he was receiving from the said company as a director. Thus the totality of circumstances point to the fact that the assessee concealed income with a view to devoid the revenue from due amount of tax payable on the correct income, if returned.
As held by the Supreme Court in case of Anwar Ali (76 ITR 696), the penalty is leviable.
Not only, even the difference in the returned income and assessed income is more than 20 per cent and Explanation to 271(l)(c) is attracted.;
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