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M/S P. Industries v. C.I.T. - INCOME TAX REFERENCE No. 153 of 1990 [2005] RD-AH 89 (6 January 2005)


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Court No.37

Income Tax Reference No.153 of 1990

M/s Prem Industries, Ghaziabad vs. Commissioner of Income Tax,Meerut.

Hon'ble R.K.Agrawal, J.

Hon'ble Prakash Krishna, J.

The Income Tax Appellate Tribunal, New Delhi, has referred the following question of law under Section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") for opinion to this Court:-

"Whether on the facts and circumstances of the case the ITAT was justified in confirming the levy of penalty u/s 271(1)(c) for concealment on account of addition of Rs. 45,000/- made by the ITO which was surrendered by the assessee without any stipulation?"

The Reference relates to the Assessment Year 1981-82 in the matter of exemption of penalty under Section 271(1)(c) of the Act.

Briefly stated, the facts giving rise to the present Reference are as follows:

In the regular assessment proceedings the applicant had agreed to an addition of Rs. 45,000/- on account of discrepancies in the stock pledged with the bank for obtaining cash credit limit which it was unable to explain. The matter ended there. Thereafter, proceedings for imposition of penalty under Section 271(1)(c) of the Act was initiated. The only explanation which was offered by the applicant was that there has been no detection of any supression or concealment of any stock and the addition have been made on the voluntary act of the applicant. The Assessing Authority did not accept the explanation and imposed the penalty. This order was, however, set aside by the Commissioner of Income Tax (Appeals) but it was reversed by the Tribunal.

We have heard Sri A. Upadhyaya, learned counsel for the applicant and Sri Shambhoo Chopra, learned standing counsel for the Revenue and have perused the order of the Tribunal.

We find that except that the plea of addition having been made on account of non detection of any suppress`ion or concealment of any stock no other plea was raised by the applicant for being not liable to penalty. The amount of addition was surrendered by the applicant voluntarily in order to avoid any further enquiry to be made by the Assessing Officer regarding stock of the applicant. The explanation offered by the applicant cannot be said to be bona fide or concealment being made not on account of willful gross negligence or fraud on the part of the applicant. Thus, the Tribunal was justified in confirming the levy of penalty for concealment on account of addition made by the Income Tax Officer.

In view of the foregoing discussion, we answer the question referred to us in the affirmative, i.e., in favour of the Revenue and against the assessee. However, there shall be no order as to costs.




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