Commissioner of Income Tax vs Jayaraj Talkies

R. Jayasimha Babu, J.—The Tribunal has given reasons for holding that the penalty is not leviable on the assessee. The reasons given are

that there was a dispute between the lessee and the lessor of the theatre which has resulted in the proceedings in court, that the statement relied on

by the Income Tax Officer was not a statement obtained from the lessee in the presence of the lessor ; that the lessor had not been given an

opportunity to cross-examine the lessee ; and that the repair work to the furniture had been carried out by the workers of one Madhava Rao and

Sons, Secunderabad, at a time when those workers had spare time on account of insufficient work being available at that time.

The Revenue contends that as the assessee-owner of the theatre who had derived income from leasing the same, had after filing a return claiming

deduction of a sum of Rs. 4,125 and Rs. 16,348 towards building maintenance and furniture repairs respectively, himself volunteered to offer these

sums as part of his income on account of the difficulty encountered by him in securing necessary vouchers and receipts. That conduct of the

assessee according to the Revenue was by itself sufficient to show that there was concealment.

The Supreme Court in the case of Sir Shadi Lal Sugar and General Mills Ltd. and Another Vs. Commissioner of Income Tax, Delhi, , has

pointed out that not every case of nondisclosure warrants imposition of penalty as the assessee may forgo a deduction or offer higher sums for

taxation for a hundred and one different reasons and all of them cannot be regarded as reasons which are unworthy of acceptance. The Supreme

Court in that case held that the Tribunal which had held that penalty was not imposable having regard to the circumstances in the case had held so

rightly.

The Supreme Court observed that from the assessee agreeing to additions to his income, it does not follow that the amount agreed to be added

was concealed income. There may be a hundred and one reasons for such admission. The reasons offered in the case has rightly been held by the

Tribunal to be relevant reasons.

The question referred to us is therefore, answered in favour of the assessee and against the Revenue.