Tube Fabrico (I) Ltd. vs Commissioner of Income Tax

This order will dispose of the application u/s 256(2) of the income tax Act, 1961 (''the Act'') in respect of the assessment years 1974-75 to 1978-79. The assessee is a firm which was carrying on business in purchase and sale of steel tubes. On 7-4-1980, there was a search u/s 132(1) of the Act at the business and the residential premises of the assessee-firm and its partners. One of the items which got known as a result of the search was that in the financial year 1977-78, relevant to the assessment year 1978-79, the assessee-firm had sold steel tubes worth Rs. 2,82,000 to one B.R. Industries, which was the personal business of one Mr. B.R. Gupta, who was the partner of the assessee-firm.

This information was available from the books of B.R. Industries when the premises of Mr. B.R. Gupta were searched and the corresponding entry was not available from the books of the assessee-firm because, according to the assessee, the books had been taken away by the accountant of the firm. What interest the accountant of the firm had in taking away the books of the firm, we would not like to comment upon but that is the story which the assessee put forth before the income tax Department for whatever it was worth.

According to the assessee, it wanted to buy peace and it offered to get itself assessed at the sum of Rs. 2,25,010 but instead of being taxed in the previous year relevant to the assessment year 1978-79 it wanted that the same should be spread over the years 1974-75 to 1978-79. Revised returns were filed by the assessee for each of the years, namely, 1974-75, 1975-76,1976-77 and it surrendered Rs. 47,000 in each year; in respect of assessment year 1977-78 the surrendered amount was Rs. 39,665 and in respect of the assessment year 1978-79, there was an addition of Rs. 54,345 to the trading account and that was not challenged in appeal by the assessee as it withdrew the appeal.

The ITO levied penalty in respect of each of these years u/s 271(1)(c) of the Act. The assessee was successful in appeal before the Commissioner (Appeals) but the Tribunal came to the conclusion that the provisions of section 271(1)(c) applied and the penalty was rightly levied. However, applications u/s 256(1) have been dismissed. The present applications have been filed wherein the assessee seeks reference of questions relating to the imposition of penalty u/s 271(1)(c).

It is contended by the learned counsel for the assessee that no penalty was leviable as it was by reason of the agreement between the assessee and the department that the sum of Rs. 2,25,010 was spread over five different assessment years. In our opinion, no question of law arises. It is a finding of fact that there was a concealed income to the extent of Rs. 2,25,010. It could have been taxed in the year in which it was found, namely, in the previous year relevant to the assessment year 1978-79. It was at the instance of the assessee that the department agreed to spread this sum over a number of years presumably for the contention that the sum of Rs. 2,25,010 may have been earned in different years. Be that as it may, merely because the assessee''s contention for spreading the said addition over a number of years had been accepted, it cannot be a reason for concluding that the assessee was not guilty of concealing its income. The very fact that the assessee filed revised returns is an admission on the part of the assessee of concealment of income. The assessee cannot plead an agreement because there can be no agreement or estoppel against a statute. When the statute itself casts a liability on an assessee, no agreement with the income tax Department can entitle an assessee to avoid that liability. Once the assessment has been made in respect of each of these years by giving effect to spread over, the only implication in law clearly is that in each of these years, there was a concealment of income and the Tribunal having decided the question of fact that the total amount concealed was Rs. 2,25,010 which was spread over, no question of law, in our opinion, arises. Dismissed.

CM No. 2749 of 1992:

Dismissed as infructuous.