LAWS(CAL)-1980-9-36

COMMISSIONER OF INCOME TAX Vs. RUPABANI THEATRES P LTD

Decided On September 18, 1980
COMMISSIONER OF INCOME-TAX Appellant
V/S
RUPABANI THEATRES P. LTD. Respondents

JUDGEMENT

(1.) In this reference under Section 256(1) of the I.T. Act, 1961, the following two questions have been referred to this court:

(2.) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that apparently an artificial juridical person like a limited company is incapable of conscious concealment of income and it would be well nigh impossible for the department to prove the existence of mens rea in the case of a company and, hence, the company was not liable to penalty for concealment ? " 2. This reference relates to the assessment for the assessment year 1964-65. In the books of account of the assessee-company, there were cash credits aggregating to Rs. 26,000 in the name of four ladies who were alleged to be related to one of the directors. The ITO did not accept the explanation offered with regard to these cash credits and added these as the assessee's income from undisclosed sources and, consequently, disallowed the interest claimed thereon. The ITO also initiated penalty proceedings under Section 271(l)(c) of the I.T. Act, 1961, for concealment of income with regard to the amount of cash credits and interest. From the order of the ITO, it appears, that the names of the four ladies and the sums standing in their respective names were as follows : <FRM>JUDGEMENT_747_ITR130_1981Html1.htm</FRM>

(3.) They are all related to Sudhir Chandra Nawn, a director of the assessee-company. Jyostna Nawn is the wife of Sudhir Chandra Nawn and Swagata Nawn is their minor daughter. Smt. Nanda Rani Dutt is also related, being the married daughter of Sudhir Chandra Nawn. Smt. Nilima Nawn is also another daughter of Sudhir Chandra Nawn. In view of the fact that in this reference an elaborate argument has been made on the nature of the explanation given by the assessee and the consequences thereof it would be appropriate for us to set out the actual evidence which according to the ITO were relevant for the purpose in the assessment order which stated, inter alia, as follows :