GARDEN SILK WEAVING FACTORY Vs. COMMISSIONER OF INCOME TAX
LAWS(GJH)-1988-3-13
HIGH COURT OF GUJARAT
Decided on March 28,1988

GARDEN SILK WEAVING FACTORY Appellant
VERSUS
COMMISSIONER OF INCOME TAX Respondents


Referred Judgements :-

PATEL D V AND COMPANY VS. COMMISSIONER OF INCOME TAX [REFERRED TO]



Cited Judgements :-

COMMISSIONER OF INCOME TAX VS. STAR PAPER MILLS LTD [LAWS(CAL)-1991-9-10] [REFERRED TO]


JUDGEMENT

R.C.MANKAD, J. - (1.)THE Income -tax Appellate Tribunal ('the Tribunal' for short) has referred to us for our opinion the following questions under section 256(1) of the Income -tax Act, 1961 ('the Act' for short) :
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in rejecting the contention of the assessee that it had disclosed a profit of Rs. 3 lakhs in the first revised return on its own without any inquiry being made by the Income -tax Officer and without any evidence to the contrary adduced by the Department ? (2) Whether there is any evidence on record to support the finding that the appellant had concealed a profit of Rs. 5,28,547 ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was liable to penalty on the estimated profit of Rs. 5,28,547 under the substantive provisions of section 271(1)(c) of the Act or in the alternative under the Explanation to section 271(1)(c) of the Act ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was liable to penalty of Rs. 7,92,820 - 150% of the income concealed ?'

(2.)THE controversy involved in the question which are referred to us for our opinion relates to the assessment year 1968 -69. The assessee is a registered partnership firm carrying on the business of manufacture of cloth. It purchases yarn from the local market and also imports the same. Sometimes the yarn is sold as such and sometimes art silk cloth is manufactured from yarn and sold in the local market as well as exported. The assessee submitted in all four return for the assessment year under reference as follows :
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -S. No. Date of filing the return Total income returned - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -Rs.1. 17 -9 -1968 3,94,4832. 30 -3 -1971 4,42,7643. 28 -2 -1972 5,90,6624. 17 -2 -1973 17,041

In the first revised return which was held on March 30, 1971, the assessee returned a profit of 3 lakhs on account of sale of import licence No. P/EP 2568395 valued at Rs. 12,708. It appears that the assessee had exported its products in the calendar year 1966 and as a result of such export, it became entitled to certain import licences. Two licences were issued to the assessee on February 25, 1967. One of such licences was a licence for Rs. 12,708 referred to above and under this licence, the assessee was entitled to import art silk yarn, tar dyes and textile chemicals of the value of Rs. 12,708. Second licence No. P/EP 2568396 authorised the assessee to import art silk yarn valued at Rs. 8,402. The amounts of both the licences were altered. The amount of the first licence was altered from Rs. 12,708 to Rs. 1,12,708 while the value of the second licence was altered from Rs. 8,402 to Rs. 68,402. It is the assessee's case that it sold the licence, the value of which was Rs. 12,708 (altered to Rs. 1,12,708) for Rs. 3 lakhs and thus a profit of Rs. 3 lakhs was earned. This profit was disclosed in the first revised return filed on March 30, 1971, as stated above. In this first revised return, the assessee also claimed depreciation and development rebate. In the second revised return, the assessee claimed deduction of Rs. 4,18,000 being the penalty levied under the Central Excises and Salt Act. It also claimed deduction under section 80J of the Act in the last revised return which was filed on February 17, 1973. The Income -tax Officer ('the I.T.O.' for short) computed the total income of the assessee for the assessment year under reference at Rs. 19,17,460 as per his assessment order passed on March 14, 1973. The Income -tax Officer also initiated action for imposition of penalty before completion of the assessment under section 271(1)(c) of the Act and as the minimum penalty imposable exceeded Rs. 25,000, the penalty proceedings were referred to the Inspecting Assistant Commissioner ('the I.A.C.' for short).

(3.)THE assessee preferred an appeal before the Appellate Assistant Commissioner ('the A.A.C.' for short) against the assessment order. The appellate Assistant Commissioner reduced the total income of the assessee to Rs. 14,95,537. In the further appeal by the assessee, the Tribunal confirmed the assessment of the total income made by the Appellate Assistant Commissioner.
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