SUBBA RAJU Vs. COMMISSIONER OF INCOME TAX MADRAS NOW HYDERABAD
HIGH COURT OF ANDHRA PRADESH
COMMISSIONER OF INCOME-TAX, MADRAS, (NOW HYDERABAD)
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(1.)The question referred to us in this case is:
"Whether on the facts and circusmtances of the case, the imposition of the penalty of Rs.4,000.00 was justified under S. 28(1)(c) of the Act?"
(2.)The assessee is described as a firm of Military contractor doing business at Tradepalligudem, West Godavari District. For the assessment year 1944-45, the firm returned an income of Rs.19,639.00 on the basis of their accounts. The Income-tax Officer called for their accounts. The Income-tax Officer called for their accounts and on examination found that they were defective. So rejecting their estimate, he added a sum of Rs.54,455.00 to the income returned.There was an appeal to the Appellate Assistant Commissioiner and a further appeal to the Income Tax Appellate Tribunal, as a result of which the sum to be added was resulted to Rs.35,354.00. Three reasons for rejecting the account books were assigned by the Income Tax Authorities: (1) There was evidence that out of the coal supplied by the Government to enable the assessee to perform a contract, the assessee sold to a private to perform a contract, the assessee sold to a private party the two waggon loads of coal for Rs,1,000/- and this sale was not disclosed in the accounts: (2) Themuster rolls produced by the assessee for wages paid did not seem to have been maintained in the ususal course of business:
(3.)No vouchers were produced in some cases of the purchase of material and of payment of cartage.The Income Tax Officer considered that the assessee had deliverately concealsed the incoem and made a false return. He, therefore, held that the firm was liable to a penalty under S. 28(1)(c) of the Act and levied a sum of Rs.4,700.00 as penalty. That imposition was confirmed on appeal to the Appellate Assistant Commissioner.On further appeal to the Incoem Tax Appellate Tribunal, they confirmed the levy though they reduced the amount to Rs.4,000.00. An Appellate Tribunal, they confirmed the levy though they reduced the amount to Rs.4,000.00 An application under S. 66(1) of the Act to the Tribunal to refer the question of law arising out of this Order to this Court was rejected, but the Madras High Court which at that time had jurisdiction in the matter directed a reference to be made under the provisionsof S.66(2) of the Act. The aforesaid question has now come up before us for decision.(3) In order to appreciate the argument of the learned Counsel for the assessee, it is necessary to extract the material portion of S. 28, Income-tax Act, S. 28(1) reads: "(28)(1): If the Income Tax Officer, the Appellate Assistant Commissioner (or the Appellate Tribunal) in the course of any proceedings under this Act, is satisfied that any person xx xx (b) has without reasonable cause failed to comply with a notice under sub-s.
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