JUDGMENT
K.S. Paripoornan, J.
1. The Income-tax Appellate Tribunal, Cochin Bench, has referred the following four questions of law for the decision of this court :
” 1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the provisions of Section 271(1)(c) are attracted to the assessee’s case in respect of the assessment year 1970-71 and onwards and that penalty is leviable ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that even in the absence of any records to show concealment or the quantum thereof for the assessment years 1970-71 to 1974-75, levy of penalty is justified?
3. Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the spread over for a period of five years is justified ?
4. Whether, on the facts and in the circumstances of the case, the Tribunal is right in confirming that the levy of penalty based on a spread over is valid and whether the conclusion that the income nature of the amount of Rs. 80,000 has to be considered as having been established by the Revenue is correct and based on valid evidence and materials ? ”
2. The reference is at the instance of the assessee. The assessee is a firm. The assessment years involved are 1970-71 to 1974-75. In these references, a common question arises for consideration. Briefly stated, the question posed is : whether the levy of a penalty of Rs. 30,000 on the assessee for each of these years is justified ? Originally, the firm had six partners. The original return for the year 1970-71 was filed on September 30, 1970. The assessment was pending in appeal. While so, there was a search of the assessee’s premises on June 7, 1975. Several books and documents were seized. The Appellate Tribunal, in the appeal filed from the original assessment, set aside the assessment order and directed a fresh assessment to be made. This order is dated July 31, 1975. Thereafter, in December, 1975, the assessee-firm made a voluntary disclosure under the Voluntary Disclosure of Income and Wealth Ordinance of 1975. The assessee disclosed an amount of Rs. 50,000 for each of the above assessment years. Revised returns were also filed. However, the assessee could not satisfactorily explain the cash position as on April 17, 1974. After adverting to the various objections raised by the assessee and also accepting in part the explanations offered, the Income-tax Officer worked out the difference at Rs. 4 lakhs as cash balance as on March 31, 1974. One Aboobacker Haji, a partner of the firm, had given a statement dated June 7, 1975. The books seized from the assessee’s premises were only a few and mostly related to the assessment year 1974-75. But, Aboobacker Haji, the partner, admitted that there were original books of account, similar to the ones seized from the premises during the search, for the earlier years also but that they were destroyed. The Income-tax Officer came to the conclusion that secret books were regularly maintained for all the five years. At the request of the assessee, the difference in cash balance as on March 31, 1974, amounting to Rs. 4 lakhs was spread over in equal proportion for the five years. On this basis, an amount of Rs. 80,000 was added to the income for each one of these years. The Income-tax Officer did not accept the returns filed under the voluntary disclosure scheme to the effect that the unaccounted income for each year amounted to only Rs. 50,000.
3. Consequent to the assessment proceedings, proceedings for levy of penalty were initiated for all the five years. The Inspecting Assistant Commissioner held that the concealed income for each year amounted to Rs. 80,000. On that basis, he held that a penalty of Rs. 80,000 is exigible. But giving credit to the income disclosed during the voluntary disclosure, he levied a penalty of Rs. 30,000 for each of these years. In appeal, the Appellate Tribunal held that the levy of penalty under Section 271(1)(c) of the Income-tax Act (in short, ” the Act “) of Rs. 30,000 for each of the years is sustainable. It was urged before the Appellate Tribunal that the Inspecting Assistant Commissioner had no jurisdiction to levy the penalty. The plea was accepted by the Appellate Tribunal (?). On that basis, the appeals filed by the assessee were allowed (?). But the Tribunal took care to say that if there was no infirmity in jurisdiction, they would have sustained, for each of the years, a penalty of Rs. 30,000 under Section 271( 1 )(c) of the Act (?). Thereafter, the assessee filed applications to refer certain questions of law, which arose out of the appellate order of the Tribunal dated April 22, 1980, to this court. The applications were dismissed. Thereafter, the assessee moved this court by way of petitions under Section 256(2) of the Act. By judgment dated August 8, 1983, this court directed the Appellate Tribunal to refer the four questions of law, extracted hereinabove, for the decision of this court, and that is how these four questions were referred by the Appellate Tribunal for the decision of this court.
4. We heard counsel for the petitioner-assessee. It was contended that, on the facts of this case, no penalty is exigible. The Appellate Tribunal overlooked the fact that the principles laid down by the Supreme Court in CIT v. Anwar Ali [1970] 76 ITR 696 will apply to this case. This was only a case where the explanation of the assessee was not accepted and the Revenue has failed to show that there was concealment of income within the meaning of Section 271(1)(c) of the Act. Counsel for the Revenue, Mr. Menon, however, contended that the Tribunal has categorically found that the assessee, has concealed its income, which is a pure question of fact, to the tune of Rs. 80,000 for each year. It is also contended that the findings of fact arrived at by the Appellate Tribunal in this regard have not been separately challenged by framing appropriate questions. On merits, it was submitted by the Revenue that, even on the assessee’s own showing, by the filing of voluntary returns and the total failure to explain the cash balance as on April 17, 1974, discernible from the books, it was self-evident that there was concealment of income. The Appellate Tribunal was justified in holding so.
5. On hearing the rival contentions of the parties, we are of the view that the decision of the Appellate Tribunal is justified. It is common ground that there was a search of the assessee’s premises on June 7, 1975. Then several books of account and documents were seized. Most of them related only to the assessment year 1974-75. But, Aboobacker Haji, one of the partners of the firm, in his statement dated June 7, 1975, categorically stated that original books of account, similar to those obtained during the search, were maintained by the firm for the earlier years also, but that they were destroyed. During the course of the assessment, the assessee could not explain the cash position as on April 17, 1974. The Income-tax Officer adverted to the explanation offered, but found that as on March 31, 1974, the difference in cash position would work out to Rs. 4 lakhs. The assessee pleaded, which was supported by the statement of its partner, Aboobaker Haji, that this difference arose not in the particular year, but was being carried on from year to year from 1970-71. The Income-tax Officer came to the conclusion that there were profits outside the books from 1970-71 onwards. Since the secret books of the earlier years were said to be destroyed, the Department was compelled to make an assessment with reference to the unexplained discrepancy detected. The matter was worked out backwards from April 17, 1974. After arriving at the unexplained cash difference as on March 31, 1974, at Rs. 4 lakhs, the assessee’s plea that it should be spread over for the five years was accepted. It was the assessee’s plea that the surplus did not relate to the assessment year 1974-75 alone. The Revenue had no other option. So, the apportionment of Rs. 4 lakhs was made for the five years at the rate of Rs. 80,000 per year. In this regard, the Income-tax Officer refused to accept that the undisclosed income was only Rs. 50,000 as disclosed in the returns filed under the voluntary disclosure scheme. He added a sum of Rs. 80,000 for each one of the years. In the penalty proceedings, the Inspecting Assistant Commissioner found independently that the above finding is justified on facts. The Appellate Tribunal also referred to the above facts and, in particular, to the statement of Aboobacker Haji dated June 7, 1975, and also the unexplained cash difference as on April, 17, 1974, amounting to Rs. 4 lakhs. After adverting to these facts, the Appellate Tribunal held :
” The assessee having disclosed Rs. 50,000 in each year and having followed it up with revised returns cannot claim that such amounts were not of income nature. The Income-tax Officer has not accepted the figure at Rs. 50,000 for very valid reasons and has estimated such figure at Rs. 80,000. We have, therefore, to come to the conclusion that the income nature of the amount of Rs. 80,000 has to be considered as having been established by the Revenue. ”
6. The Appellate Tribunal proceeded to say that the Income-tax Officer had good evidence and recorded a definite finding that the amount added by him represented the assessee’s suppressed business income for each of the five assessment years and the Inspecting Assistant Commissioner has also come to the conclusion that there is concealment. The Appellate Tribunal concurred with these findings and concluded as follows :
” For these reasons, we would come to the conclusion that concealment is established in respect of the amount of Rs. 80,000 in each of the years. ”
7. The Appellate Tribunal gave effect to the voluntary disclosure scheme and held that for each of these years, the penalty can be based in respect of the difference of Rs. 30,000 in each year. We are of the view that the question as to whether the penalty is exigible in a particular case is ordinarily a question of fact. The Appellate Tribunal has, for very valid reasons given in paragraph 15 of its order, held that the assessee has suppressed its business income and that concealment is established in respect of Rs. 80,000 for each year. The said finding is based on ample material. We do not think that interference is called for with the said finding.
8. The four questions formulated by the assessee for the decision of this court do not directly challenge the finding of fact arrived at by the Appellate Tribunal. Counsel for the assessee, however, stated that question No. 4 will involve a consideration as to whether the finding of the Appellate Tribunal is based on valid evidence and materials. We are unable to accept this plea. Even so, it is established by substantial material in this case that the assessee had suppressed its income and that concealment is established in respect of the amount of Rs. 80,000 in each of these years. The penalty of Rs. 30,000 for each year ultimately sustained, is valid.
9. As a result of the above discussion, we answer the questions referred to us in the following manner :
Question No. 1 : We answer this question in the affirmative, against the assessee and in favour of the Revenue.
Question No. 2 : The Tribunal has held on the basis of materials that concealment and the quantum fixed for the years 1970-71 to 1974-75 are justified. The Tribunal was justified in holding so.
Question No. 3 : We answer this question in the affirmative, against the assessee and in favour of the Revenue.
Question No. 4 : We answer this question in the affirmative, against the assessee and in favour of the Revenue.
10. A copy of this judgment under the seal of this court and the signature of the Registrar will be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.