On looking into the accounts and other records, the Income ,Lax Officer made several additions to the amount shown in the return and ultimately fixed the total assessable income in the sum of Rs.
The respondent was a firm carrying on business of manufac turing silk, carbon papers, type writer ribbons, liquor, spiriturous drugs and chemicals etc.
Similarly, regarding chemical section, the Income tax Officer found that the respondent has number accounted for a part of sale of Ethyl Acetate and that on verification it Was found that there has been a large deficit of rectified spirit.
It was on the above basis that the two items were included in ,,,he total assessable income of the assessee firm.
They were Silk business shortage in twisted silk yarn Rs.
The main grievance made by the assessee was that there has been numberindependent companysideration by the Income tax Officer of the Appellate Assistant Commissioner whether even on the basis that there has been an omission by it to include certain items in its return, such omission came within s. 28 1 c of the Act, so as to attract the levy of penalty.
They are Pharmaceuticals, section Rs.
A Division Bench of the High Court by its order dated October 3, 1966 dismissed the appellants application on ,,he ground that the finding of the Appellate Tribunal that the Income tax Department had failed to prove that the assessee had companycealed its income or that it had deliberately furnished inaccurate particulars of its income are all on facts and that number question of law arises from the order of the Appellate Tribunal.
3,434.00 Carbons Unaccounted companysumption Rs.
3,30,474.
Appeal by special leave from the judgment and order dated October 3, 1966 of the Mysore High Court in Civil Petition No.
The explanation offered by theassessee was number accepted by the Income tax Officer, and the latter by his order dated February 15, 1963 imposed a penalty of Rs.
That amount of penalty was levied by the Income tax Officer on the ground that over and above the two items relating to the Pharmaceuticals and Chemical sections, there has been a companycealment of three more items totalling Rs.
3 5,000 levied under section 2 8 1 c of the Indian Income tax Act, 1922.
In the further appeal by the assessee to the Appellate Tribunal, there was numberalteration in this figure.
On this basis the Income tax Officer drew an inference that the firm has again secreted a large quantity of rectified spirit under the cloak of manu facture of chemicals.
The appellant filed an application before the High Court of Mysore, under s. 66 2 for directions being issued to the Appellate Tribunal to, state the case and refer the question of law, which the Appellate Tribunal has refused to refer.
The Commissioner of Income tax filed an application under s. 66 1 of the Act, requiring the Appellate Tribunal to draw up a statement of the case and refer the question extracted in the earlier part of the judgment, to be referred to the High Court.
On appeal to the Appellate Assistant Commissioner, the latter, numberdoubt deleted these three items totalling Rs.
There was numberevidence produced by the assessee to show that the Kolae powder, which was very essential for the manufacture of tincture had been purchased by it.
The Income tax Appellate Tribunal by its order dated Novem ber 13, 1964 set aside the order of the Income tax Officer as companyfirmed by the Appellate Assistant Commissioner levying penalty on the respondent.
The Appellate Tribunal by its order dated June 7, 1965 rejected the Said application on the ground that the reasons given by it for setting aside the penalty proceedings were all based on findings of fact and that numberquestion of law arose out of those findings.
The assessee also companytended that both the Income tax Officer and the Appellate Assistant Commissioner have mainly relied on the reasons given in the order of assessment for adding these two items in the total income.
The assessee carried the matter in appeal before the Income tax Appellate Tribunal, Madras Bench.
32,267 from the penalty proceedings, but companyfirmed the order of the Income tax Officer regarding the two other items holding that the omission by the assessee to include the said two items amounted to the firm companycealing particulars regarding its income under s. 28 1 c of the Act.
On appeal, the amount was reduced and the taxable income was fixed in the sum of Rs.
35,000 on the ground that the respondent had companycealed the particulars of its income.
On the ground that certain sales had number been properly accounted for, the sum of Rs.
These reasons given by the Income tax Officer have been, by and large, accepted by the Appellate Assistant Commissioner and the Income tax Appellate Tribunal.
2,09,575.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
The penalty amount levied by the Income tax Officer was also companyfirmed.
In respect of the assessment year 1955 56, the respondent had sent a return showing Rs.
10 of 1966.
Though the Appellate Assistant Commissioner reduced the quantum of companycealment even assuming that there has been a companycealment he did number make any reduction in the penalty actually levied by the Income tax Officer.
32,267.
Relating to the pharmaceuticals section, it is the view of the Income tax Officer that some of the sale bills produced by the respondent were found to be forged ones and some of the purchasers of tincture were also fictitious persons.
The assessee sent a reply stating that it has number companycealed the particulars of its income number has it deliberately furnished inaccurate particulars of such income.
Hence the Income tax Officer drew an inference that the respondent had number really manufactured tincture and that on the other hand the firm must have sold all alcohol illicitly.
Only two items which were added to tilt income and which have been accepted by all the authorities required to be numbericed.
9,900.00.
77,588.
9,900 was added to the taxable income of the assessee.
14,288.00 It was on this basis that the total penalty was levied.
in cancelling the penalty of Rs.
14,545.00 Shortage in Artificial silk Rs.
51,214 as taxable income.
The question of law, which the appellant wanted to be referred was Whether on the facts and in the circumstances of the case the Appellate Tribunal was right.
The respondent did number appear.
648 of 1967.
H. Dhebar and J. Ramamurthi, for the appellant.
The Judgment of the Court was delivered by Vaidialingam, J. This appeal, by special leave, by the Commissioner of Income ,tax, Madras, is against the judgment and order dated October 3, 1966 of the High Court of Mysore, rejecting the appellants application filed under s. 66 2 of the Income tax Act, 1922 hereinafter to be referred as the Act for directing the Income tax Appellate Tribunal, Madras Bench to refer the question of law to the High Court.
