HAJI P.V. MOHAMMED BARANI & SONS Vs. THE COMMISSIONER OF INCOME-TAX
HIGH COURT OF KERALA
Haji P.V. Mohammed Barani And Sons
The Commissioner Of Income -Tax
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(1.) THE question referred to this Court by the Income -tax Appelate Tribunal,Cochin Bench,is in these terms: "Whether on the facts and in the circumstances of the case the imposition of penalty under section 271(1 )(c)of the Income -tax Act,1961,on the applicant firm for the year 1964 -65 is justified or warranted and whether it is legal and valid? "
(2.) THE assessee firm,who builds boats and exports them outside India,returned a total income of Rs.99,993 made up as hereunder: Income from property Rs.1,200.00
Income from business Rs.98,793.
During the accounting year,the assessee built 9 boats.Another boat was purchased by the assessee in auction.Alter extensive repairs,this was also made seaworthy.These 10 boats were sold to parties in the Gulf States.The total value shown by the assessee was Rs.1,49,150.00.Since the boats were being exported outside India,they had to go through the Customs Authorities.The Customs Collector fixed the export value of these boats at Rs.2,44,650.00.Though the assessee objected to these valuations,he prepared fresh invoices at the rates fixed by the Customs Officer and exported them.The Income -tax Officer took the value of the boats at the sale price fixed by the Customs Authorities and the assessment was completed on a total income of Rs.2,22,820.00,made up as hereunder: Business Rs.2,21,618.30
Other sources Rs.1,200.00
The Income -tax Officer held that the real sale price of the boats was the value fixed by the Customs Authorities and so added the difference in the sale value to die assesee's income.This assessment was confirmed in appeal and second appeal.In die meantime,the inspecting Assistant Commissioner of Income -tax initiated penalty proceedings for concealment of income and imposed a penalty of Rs.21,000.We are concerned in this reference only with the penalty proceedings.
(3.) THE learned counsel for the assessee relied upon the dictum contained in Commissioner of Income -tax v. Anwar Ali, 1970(76)I.T.R.696 to contend that the Department had not discharged die burden of proof that the amount in dispute constitutes his income.The principle is enunciated as follows: "The gist of the offence under section 28(1 )(c)is that the assessee has concealed the particulars of his income of deliberately furnished inaccurate particulars of such income and the burden is on the Department to establish that the receipt of the amount in dispute constitutes income of the assessee.If there is no evidence on the record except the explanation given by the assessee,which explanation has been found to be false,it does not follow that the receipt constitutes his taxable income.It would be perfectly legitimate to say that the mere fact that the explanation of the assessee is false does not necessarily give rise to the inference that the disputed amount represents income ;.Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars " ;.
The principle enunciated in the above decision is that even though an assessee is assessed to a particular income the Department has to discharge the burden,in penalty proceedings that the assessee had in his hands the said income and that the assessment proceedings cannot be made the basis for such finding.The principle laid down in the above case is not of universal application.It has to be applied with reference to the facts of each case.We feel that the case on hand is easily distinguishable.;
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