Kholwadwala Dyeing and Printing Mills vs Commissioner of Income Tax

R.S. Garg, J.—The Income Tax Appellate Tribunal, Ahmedabad Bench "C", has made this reference for its answer by the High Court on the following question:

Whether, on the facts and in the circumstances of the case, the Tribunal was right in upholding partially the penalty order passed by the Income Tax Officer u/s 271(1)(c) of the Income Tax Act, 1961

Shri R.K. Patel, learned Counsel for the assessee and Shri B. B. Naik, learned Counsel for the Revenue are heard. Shri Patel submitted that, on the facts and in the circumstances of the case, no penalty could be levied against the interests of the present assessee especially in view of the fact that they had filed the return voluntarily and revised the same after the penalty was imposed

On the other hand, Mr. Naik, learned Counsel for the Revenue submitted that the assessee had received almost about 32751 metres of man-made fabric, processed the same, allowed its exit without paying the excise and without referring to the charge of the processing charges in the account books and, after the raid was conducted and penalty was imposed, a return came to be filed and it was revised almost after 2 years of its filing. He submits that, in the quantum appeal between the same parties, the Tribunal has made certain observations against the interests, and observed that the action of the assessee was unfair. He submits that the present is not a case where no penalty could be imposed.

The Tribunal had recorded findings that on August 6, 1980, the Central Excise Department effected a raid, it found that 32751 metres man-made fabric was allowed exit from the factory premises, the amount received by the assessee as processing charges were not shown in the books. From the records, it would also appear that the original return was filed almost 2 years after the alleged raid and the revised return came to be filed 2 years thereafter.

Taking into consideration that, in the original return nothing was mentioned about the excise raid, but the revised return came to be filed only after the things started precipitating on the surface of the records. If this was the conduct of the assessee, then the Tribunal was extra lenient in favour of the assessee in observing that present would be a case where the minimum penalty was to be levied.

On the facts and in the circumstances of the case, we are unable to hold that present was a case where no penalty should have been charged. We answer the reference in favour of the Revenue. The reference stands disposed of accordingly. No costs.