M/S KRISHNA MINING CO., GOGINENIPURAM GUDUR Vs. THE COMMISSIONER OF INCOME TAX, A.P. HYD
HIGH COURT OF ANDHRA PRADESH
M/S Krishna Mining Co., Goginenipuram Gudur
The Commissioner Of Income Tax, A.P. Hyd
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CHINNAPPA REDDY,J. -
(1.) The questions referred to us by the Income-Tax Appellate Tribunal are as follows:
"(1) Whether, on the facts and in the circumstances of the case, no penalty was leviable on the assesses firm merely by reason of the fact that a separate addition representing the cash credits was deleted and the said telescoped with the addition made for understatement of yield of mica?
(2) Whether, on the facts and in the circumstances of the case penalty could be levied on the firm as constituted in 1965 in respect of the assessment year 1958-59? and
(3) Whether, on the facts and in the circumstances of the case, a penalty could be levied under S. 271(1)(e) of the Income-tax Act, 1961, in respect of the assessment year 1958-1959 the assessment for which had been completed under the provisions of the Income-Tax Act, 1922?"
(2.) It is conceded that the second and third questions have to be answered in favour of the department. They are so answered. The first question remains.
(3.) The assesses is a firm carrying on business in mica. In the course of the assessment proceedings for the assessment year 1958-1959 the Income Tax Officer noticed that there was a sudden fall in the production of cut mica during the months of September, October and November, for which there was no satisfactory explanation by the assesses. The Income-Tax Officer came to the conclusion that the production of cut mica during these three months was understated. He estimated the value of such deficit production at Rs. 1,20,000/-. The Income-Tax Officer also noticed that there were cash/credits on 11-6-1957, 25-7-1957 and 6-8-1957 amounting to Rs. 60,000/-. The assesses's explanation that these amounts were borrowed from one Arjundas Pokardas was rejected by the Income Tax Officer. He treated the sum of Rs. 60,000/- as the income of the assesses from other sources. He also disallowed a sum of Rs. 1350/- said to have been paid to Arjundas Pokardas by way of interest. He thus added a total sum of Rs. 1,81,350/- to the income returned by the assesses. There was an appeal by the assesses to the Appellate Assistant Commissioner and further appeals to the Income-Tax Appellate Tribunal by both the department and the assesses. The Tribunal while confirming the finding that the yield of Cut mica during the months of September, October and November was under stated in the books of the assesses, estimated the value of the deficit yield at Rs. 60,000/-. The alleged borrowals from Arjundas Pokardas were not also believed. It was held that the cash credits represented income receipts. The tribunal, however was of the view that it the amount of Rs. 60,000/- representing the deficit yield and the amount of Rs. 60,000/- representing the cash credits need not be separately added. At the instance of the department the Tribunal started a case and referred certain question to the High Court for its decision. The High Court after reformulating the question to bring out the real controversy between the parties held that the amount of Rs. 60,000/- representing the cash credits and the amount of Rs. 60,000/- representing the suppressed yield of mica should be separately added. The decision of the High Court was in R.C. No. 3/1968 on 27-2-1970.;
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