JUDGMENT Rajes Kumar, J.
1. The Income Tax Appellate Tribunal has referred the following question of law under Section 256(2) of the Income Tax Act, 1961 (hereinafter referred to as Act) for the assessment year 1981-82 for opinion to this Court.
"1. Whether the Tribunal was justified in canceling the penalty under Section 271(1)(c) specially when the revised return was filed after the search operation when loose papers recovered indicated unrecorded transactions and unrecorded unexplained investment?"
2. The brief facts of the case are as follows:-
The assessee opposite party hereinafter referred to as 'assessee') was a partnership Firm and was carrying on the business of purchase and sales o f cloths and was also carrying on the business of money lending. Assessee filed return of income on 27.7.1981 showing loss of Rs. 3.660/- and thereafter. a search was conducted at the business premises on 23.9.1981 and also residential premises of the partner of the Firm under Section 132 and during the course of search. certain loose Purchas were found in which, transactions relating to the sales were found entered which were not found recorded in the books of account: In the loose paper. total entries towards debit side was at Rs. 90,411/- and on a credit side at Rs 31.659 - Assessee filed a revised return on 10.8.1982 showing an income of Rs. 2.360-. In the revised return, entries made in the loose Purchas at Rs. 90.41! -has been treated as the sale and on which. profit at Rs. 6,012/- has been calculated and accordingly, as against the loss income at Rs. 2.360/- was shown. Assessment order was completed on a total income at Rs 1.20,070'- inclusive of Rs. 90.411 -and Rs 31.659/- being unrecorded as well as income from undisclosed sources respectively. The aforesaid addition was confirmed by the C.I.T.(Appeals) Tribunal, however, in Second Appeal deleted the addition of Rs. 31.659 - and has confirmed the addition of Rs. 90,411/-. Assessing Authority levied penalty under Section 271(1)(c) at Rs. 58.944/- being minimum penalty imposable. C.I.T (Appeals.) allowed the appeal in part and deleted the penalty leviable on the amount of Rs. 31.659/- which was deleted by the Tribunal but has sustained the penalty at Rs. 37,320/- on the amount of Rs. 90,411/- treating it as a concealed income. Assessee filed appeal before the Tribunal. Tribunal allowed the appeal and deleted the entire penalty. Tribunal held as follows:-
"We have perused the entirematerial placed before us and we find that even though in the quantum assessment the addition sustained by the Tribunal, ingredients of Section 271(1)(c) are not present in this case. The very fact that the assessee filed voluntary return disclosing profit on sales found on the loose papers showed the intention of the assessee and it establish the Conduct of the assessee. This was specially so because even notice under Section 148 has not been issued by the department. There could be one hundred one reason for including the profit on sales found on the loose papers There is also force in the contention that the loose papers I have been recovered from the room of Shri Sita Ram who was neither a partner of the firm nor connected with the assessee. There was no query made regarding the loose papers from any person. Therefore. apart from the inference of the department, there was no establishment of the guilt of concealment (SHRING GRAHJKAYA) (identifying the cow by showing the horn.) Lastly, we do recognize the difference between the quantum proceedings and the penalty proceedings. Simply because the addition was confirmed in the quantum proceedings, the same will not per as establish the charge of concealment. In the view, we have taken above, we find that the penalty levied with reference is the sales on loose papers was not justified and the same is conceited. The cases relied on by the learned D.R. are slightly distinguishable in the case before us and therefore, they have not been individually discussed and distinguished.
In the end, appeal is allowed."
3. Heard Sri A. N. Mahajan, learned Standing Counsel appearing on behalf of Revenue. No one appears on behalf of assessee.
4. Learned Standing Counsel submitted mat the Present is the clear case of concealment. He submitted that the entries in loose Purchas have been admitted relating to the concealed sales of assessee business and in the revised return, profit out of the said sales have been disclosed. He submitted that the revised return was not voluntary and in good faith and when at the time of search, loose Purchas were found, in" which, entries relating to the sales were recorded, which were not found entered into the books of account, the assessee filed revised return showing profit thereon. He further submitted that even the entire amount at Rs. 90,41)./- has not been shown as the income. He submitted that the Tribunal has wrongly recorded the finding that the assessee filed voluntary return disclosing profit on sales found on the loose papers showed the intention of the assessee and it established the conduct of the assessee. He submitted that the Tribunal has deleted the Penalty on an irrelevant consideration and recording wrong findings.
5. We have perused the order of Tribunal and the authorities below. In our opinion, order of Tribunal deleting the penalty is based on irrelevant consideration and on wrong facts Findings of Tribunal are perverse and without any basis, in the present case, income shown in the revised return was not voluntary When the assessee was caught and during the course of search, loose Purchas were found, in which, entries relating to the sales were found not recorded in the books of account. Assessee treated the entries of Rs. 90,411/- relating to the sales and has shown profit at Rs. 6,012/- @ 6 55%. therefore, Tribunal has erred in observing that the assessee filed voluntary return disclosing profit on sales. Assessee has not offered any explanations as to why sales recorded in the loose Purchas were not entered in the books of account and income relating thereto has not been disclosed in the return On the facts and circumstances of the case, present is the clear case of concealment. If search would not have been made and loose Purchas have not been detected, assessee would have escaped the income from the assessment. In our opinion, on the facts of the case, assessee deliberately concealed the sales of cloth, therefore, liable for penalty. For the reasons stated, penalty levied by the First Appellate Authority is restored.
6. For the reasons stated above, we answer the question referred to us in negative i. e. in favour of the revenue and against the assessee. However, there shall be no order as to costs.