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1990 DIGILAW 4 (MAD)

Kanakammal v. Income-Tax Officer.

1990-01-03

T.NC.RANGARAJAN

body1990
ORDER Per Shri T. N. C. Rangarajan, Judicial Member - These appeals are directed against the imposition of penalties under section 271(1) (c) of the Income-tax Act, 1961. 2. The assessee is an individual. For the assessment years 1976-77 and 1977-78, corresponding to the previous years ended 31-3-1976 and 31-3-1977, the assessee filed returns on 30-12-1976 and May 1978 respectively showing total income of Rs. 33,716 and Rs. 52,477. This include income from bus and lorry business amounting to Rs. 18,100 and Rs. 38,607 respectively. Subsequently there was a search in the premises of the assessee on 6-6-1978 when certain registers were found and they disclosed daily collections from the bus and lorry quite at variance from the day book and ledger on the basis of which the assessee had admittedly prepared the returns. The Income-tax Officer proposed to add the difference but the I. A. C. gave direction under section 144B taking into account some undisclosed expenditure also whereby the income from the business was determined at Rs. 60,513 and Rs. 1,01,685 respectively. On appeal the CIT (Appeals) granted some further relief. On these facts the ITO was of the view that the assessee had concealed income from business and the other sources also in respect of which additions were made and imposed penalties under section 271(1) (c). The assessee appealed and argued that since the income was only estimated the assessee could not be considered to have concealed any income. However, the CIT (Appeals) was of the opinion that even the estimate was made on the basis of the books seized and, therefore, the assessment of the suppressed income led to the finding of concealment in respect of which penalty was exigible. Nevertheless he reduced the penalty to the minimum imposable in respect of the income concealed with regard to the income from business only since he found that there was no concealment with regard to the other source of income. 3. In the further appeal before us it was contended on behalf of the assessee that the books of the assess were admittedly unreliable and, therefore, when an assessment was made on estimate by rejecting the books, there could not be any finding of concealment in that regard. 3. In the further appeal before us it was contended on behalf of the assessee that the books of the assess were admittedly unreliable and, therefore, when an assessment was made on estimate by rejecting the books, there could not be any finding of concealment in that regard. We are unable to accept this contention because admittedly the income returned was itself not an estimate but only that based on the books which were found to be fudged. In fact when the assessee filed a revised statement of income after the search it was stated. "In the absence of proper books of accounts, the accounts have not been maintained in the manner required and hence the income arrived at and returned already on the basis of the available records has been revised in a more acceptable manner and the income returned now has been estimated." This itself amounts to a confession that the income returned in the original return was based on the set of books which were kept for presentation and which were found to be incorrect since the assessee had another set of registers which disclosed the correct information regarding the receipts. We are, therefore, of the opinion that the conclusion of the authorities below that the assessee has concealed the particulars of the income and furnished inaccurate particulars of such income is unassailable. 4. In the alternative, it was contended on behalf of the assessee that the assessee was an old uneducated and sickly lady who was unaware of the facts and, therefore, should not be found to be guilty of contumacious conduct on her own and should not be punished for any misconduct of her employees. We are unable to accept this contention either because the assessee has to take the vicarious responsibility for the fudging of the accounts which has not been proved to have been made without her tacit approval. Whatever the manner in which the business was conducted she cannot abdicate her responsibility in filing the return as it amounts to a verified statement in respect of which to shifting of blame is possible without admitting gross or wilful neglect if not fraud. Even if it is claimed that the assessee simply adopted the figures furnished by the employees it would amount to a wilful default because there was conscious carelessness as to whether or not the assessee was doing her duty. Even if it is claimed that the assessee simply adopted the figures furnished by the employees it would amount to a wilful default because there was conscious carelessness as to whether or not the assessee was doing her duty. [see -Clixby v. Pountney (Inspector of Taxes) [1969] 72 ITR 340 (Ch. D.)]. Therefore the furnishing of the inaccurate particulars of the income is attributable to the gross and wilful negligence of the assessee and the imposition of the penalty under section 271(1) (c) is, therefore, justified on the facts of the case. We, therefore, confirm the order of the CIT (Appeals). The appeals are dismissed.