Ita/82/2001 Of K.v. Mohammed v. Asst.commissioner Of Incometax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR MONDAY, THE 11TH FEBRUARY 2008 / 22ND MAGHA 1929 ITA.No. 82 of 2001() -------------------- ITA.763/1990 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT: ----------------- SRI.K.V.MOHAMMED,ARECANUT MERCHANT,CHANGARAMKULAM,NANNAMUKKU POST,MALAPPURAM-679 575. BY ADV. SRI.P.BALACHANDRAN (SR.) RESPONDENTS/APPELLANT: ------------- 1.ASSISTANT COMMISSIONER OF INCOME TAX,CIRCLE-I, PALAKKAD. 2.THE COMMISSIONER OF INCOME TAX,COCHIN. BY ADV. SRI.P.K.R.MENON(SR), SC FOR IT THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 11/02/2008, ALONG WITH ITA NO. 159 OF 2001, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR &T.R.RAMACHANDRAN NAIR, JJ. .................................................................... I.T. Appeal Nos.82 & 159 of 2001 ....................................................................Dated this the 11th day of February, 2008. JUDGMENT C.N.Ramachandran Nair, J. These appeals, one filed by the assessee and the other by theDepartment, arise from a common order of the Tribunal in a penalty appealfiled by the Department for the year 1985-86. The assessee was a merchantengaged mainly in purchase and sale of arecanuts. During the course ofassessment, the Assessing Officer noticed undervaluation of closing stockand declaration of substantially low gross profit compared to gross profitreturned for earlier years. Even though assessee got relief in assessmentappeal, substantial additions have been sustained. In the appeal filedagainst penalty order issued under Section 271(1)(C) for concealment ofincome, the C.I.T.(Appeals) cancelled the penalty. Against this, appeal wasfiled by the department before the Tribunal and the Tribunal partly allowedthe department's appeal and restored penalty pertaining to closing stockvaluation and on share income from hotel business. It is against this orderof the Tribunal both the assessee as well as the department filed theseappeals. We have heard Senior counsel Sri.P.Balachandran, appearing for the petitioner and Sri.P.K.R.Menon, appearing for the Income TaxDepartment. 2. We find that penalty levied is on three grounds, first one pertains toestimation of gross profit after rejecting the low rate of gross profit returnedby the assessee. The Tribunal noticed that assessee has not consciouslyconcealed any particulars of income. Even though gross profit returned inthis year was much lower than the gross profit returned in the immediatelypreceding year, the addition in the assessment made in this account wasRs.9,32,800/-. On appeal, the C.I.T.(Appeals) re-estimated the income onaccount of difference in gross profit at Rs.5 lakhs. Since it is a case of onlyestimation of income on account of low rate of gross profit returned, we areof the view that the Tribunal rightly sustained the order of theCommissioner in cancelling the penalty. The department's appeal againstthis part of the order of the Tribunal is therefore dismissed. 3. So far as assessee's appeal is concerned, we do not find any groundto interfere with the Tribunal's order because under the amended provisions,the assessee was bound to give bonafide explanation about the concealmentnoticed in the form of undervaluation of closing stock. Assessee'sexplanation is that the stock maintained at Orissa was of inferior qualityand the sale of the item in the next year proves the same. However, the 3. So far as assessee's appeal is concerned, we do not find any groundto interfere with the Tribunal's order because under the amended provisions,the assessee was bound to give bonafide explanation about the concealmentnoticed in the form of undervaluation of closing stock. Assessee'sexplanation is that the stock maintained at Orissa was of inferior qualityand the sale of the item in the next year proves the same. However, the Tribunal found that apart from raising a contention of this nature, theassessee did not produce any details of lower price or produce any evidenceto substantiate that the goods stocked at Orissa was of inferior quality.Since the assessee failed to give a bonafide explanation, we feel theTribunal rightly sustained the penalty pertaining to undervaluation ofclosing stock. The next ground raised in the assessee's appeal pertains topenalty levied on the share income from hotel. It is seen from theTribunal's order that assessee has not pressed this argument, probably onaccount of the fact that share income was only Rs.5,350/-. We cannotentertain any argument which was not pressed before the Tribunal. We,therefore, dismiss the assessee's appeal also. C.N.RAMACHANDRAN NAIRJudge pms T.R.RAMACHANDRAN NAIRJudge