P.M.C. Subramaniam Chettiar vs Commissioner of Income Tax

Govindan Nair, J.—The question referred to us by the Income Tax Appellate Tribunal, Cochin Bench, is in these terms :

"Whether, on the facts and in the circumstances of the case, the levy of penalty u/s 28(i)(c) was justified ?''

When a question of this nature is referred to us, we naturally turn to Anwar Ali''s case and that is the decision that has been relied on by counsel for the assessee which is in Commissioner of Income Tax, West Bengal I, and Another Vs. Anwar Ali, . We have had occasion to deal with this aspect in a number of decisions and as far as we can remember in all cases where the penalty has been imposed merely on the ground that the Tribunal in the appeal from the assessment had found the explanation of the assessee in relation to a credit entry unsustainable, that by itself did not provide the base for the imposition of penalty. For the imposition of penalty a greater degree of proof was insisted upon and there must be clear finding on the materials available that there has been a concealment of income or furnishing of inaccurate particulars thereof. We have, therefore, to examine this case to find out whether the penalty in this case has been imposed merely on the basis of the rejection of the explanation of the assessee contained in the order of the Tribunal in the assessment proceedings or whether there was a finding that there has been a concealment of income. We shall extract a part of the order of the Tribunal in the penalty proceedings dealing with this aspect:

"9. Having considered the facts and arguments, we are convinced that the provisions of Section 28(i)(c) were rightly applied to this case. The assessee has no answer to the findings given by the Appellate Tribunal that there was clear evidence of bill forms having been printed and utilised and of the assessee having done order business in the year which he denied. The evidence of Govinda Pillai stands unrepudiated. There was a clear omission of this sale. It was deliberate. It was the investigation of the department that brought out the suppression of order sales. It is also significant to note that the assessee failed to produce the vouchers and kurippu for the accounting years 1127 M.E. and 1128 M.E. This was probably to defeat detection. The suppressed income had to be estimated because the assessee had failed to place all the materials. This does not mean that income had not been concealed. When it is shown that some income bad been concealed, the penalty provisions are attracted. We uphold the penalty order and we do not see any extenuating circumstance to interfere with the amount of penalty."

The above finding of the Tribunal we are not prepared to say is based on no relevant material. There is a clear finding by the Tribunal and that, we think, discharges the burden which must be undertaken by the department and on the facts of the case we think it is the principle of the decision of the Supreme Court in D.M. Manasvi Vs. Commissioner of Income Tax, Gujarat, II Ahmedabad, that should apply.

We, accordingly, answer the question referred to us in the affirmative, that is, in favour of the department and against the assessee. We direct the parties to bear their respective costs.

A copy of this judgment under the seal of the High Court and the signature of the Registrar will be sent to the Appellate Tribunal as required by Sub-section (1) of Section 260 of the Income Tax Act, 1961.