Commissioner Of Income-Tax vs Balram Giddumal, Shyamlal ...
2007 Latest Caselaw 387 Bom

JUDGMENT

J.P. Devadhar, J.

1. All these applications, filed by the Revenue under Section 256(2) of the Income-tax Act, 1961, were admitted on the questions of law raised in the respective income-tax applications.

2. The assessment years involved in all these applications are the assessment year 1983-84 to the assessment year 1986-87.

3. The basic question raised in all these applications is, whether the Tribunal was justified in deleting the penalty levied under Section 271(1)(c) of the Income-tax Act, 1961 ?

4. The respondents-assessees are commission agents deriving income from commission on sale of oranges/mosambis. The assessments for the respective assessment years were completed by accepting the commission income disclosed in the return of income filed by the assessees.

5. There was a search action at the business premises of the assessees on July 23, 1987. During the course of search operation, no incriminating documents were found. However, the Assessing Officer collected information regarding the cess paid by the assessees to the Agricultural Produce Market Committee (the APMC for short). From the cess paid by the assessees to the APMC which was 0.55 per cent. of the turnover, the Assessing Officer calculated backwards and arrived at the total turnover of the assessees. As the commission was usually charged at seven per cent. the Assessing Officer computed the commission on the total turnover determined by him which was much higher than the commission income disclosed by the assessees in their returns of income.

6. When the assessees were confronted with the above computation, the assessees submitted that they have not received any commission in excess of the amount disclosed in their respective books of account. However, with a view to buy peace, the assessees filed revised returns disclosing additional income. Without making any further investigation to refute the contentions of the assessees that they have not received commission at seven per cent. the Assessing Officer accepted the revised returns filed by the assessees and completed the assessment and after initiating penalty proceedings, levied penalty under Section 271(1)(c) of the Act.

7. Being aggrieved by the penalty orders passed by the Assessing Officers, the assessees filed appeals before the Commissioner of Income-tax (Appeals), who deleted the penalty inter alia on the ground that the fact that the assessees have offered additional amount as income after the search cannot be a ground to levy penalty because no concealment of income was discovered during the course of search or thereafter. Being aggrieved by the aforesaid order, the Revenue filed appeals before the Income-tax Appellate Tribunal and the same were dismissed. The reference applications filed by the Revenue under Section 256(1) were also rejected by the Tribunal. Hence, the Revenue has filed the present applications under Section 256(2) of the Act.

8. In all these cases, it is not in dispute that during the course of search, no incriminating documents were found at the premises of the assessees. On the basis of the books maintained by the assessees and the cess paid by the assessees to the APMC, the Assessing Officer calculated the total turnover. It is not in dispute that the particulars received by the Assessing Officer from the APMC did not disclose any particulars regarding the actual commission received by the assessees. Generally, it may be that on sale of oranges/mosambis, commission is paid at seven per cent. however it was possible as contended by the assessees that in some cases commission was paid at less than seven per cent. Moreover, in the present case, the Tribunal has accepted the contentions of the assessees that there was a practice by the commission agents to give return commission and, therefore, the Assessing Officer was not justified in computing the commission income at seven per cent. The Commissioner of Income-tax (Appeals) has further held that the income computed by the Assessing Officer was purely on estimate basis and there is no clear cut acceptance on the part of the assessees that the additional amount offered by them was the commission income received by them. The Tribunal has further held that having failed to rebut the explanation given by the assessees, the Assessing Officer could not have levied penalty under Section 271(1)(c) of the Act.

9. Thus, the decisions of the Tribunal in all these cases that there was no detection of concealment of income is based on the finding of fact. Therefore, in our opinion, the questions raised by the Revenue cannot be said to give rise to referable questions of law.

10. Accordingly, all these applications are dismissed. Rule is discharged. No order as to costs.