Advocates:
For the Revenue :S.M. Mehta, Advocate.
For the Opposite party : None.

JUDGMENT

1. - This reference has been made by the Income-tax Appellate Tribunal, Delhi Bench " C ", in compliance with the directions of this court contained in the order dated February 16, 1970, in D.B. Civil Income-tax Case No. 66 of 1969, It arises out of the order dated October 5, 1967, by the Tribunal in Income-tax Appeal No. 11677 of 1965-66.

2. The assessment year under consideration is 1959-60 (ending on March 31, 1959). The assessee, Dr. R. C. Gupta, carries on business under the name and style, Dr. R. C. Gupta & Company, as well as M/s. Laxmi Cycle Industries. He filed a return in the name of Dr. R. C. Gupta and Company, declaring an income of Rs. 3,022 from the property as well as business in cycle and motor parts, etc. He also filed another return in respect of his business carried on under the name and style, M/s. Lax mi Cycle Industries, and returned " nil " income (though the trading and profit and loss account showed a profit of Rs. 248). The ITO, however, did not accept the income as returned by the assessee. He determined the income from property as well as from the business carried on under the name and style, Dr. R. C. Gupta & Company, at Rs. 4,525 and the income from the business carried on under the name and style, M/s. Laxmi Cycle Industries, at Rs. 1,785 as disclosed from the books. But he also found that the books of account produced by the assessee did not disclose a correct state of affairs and that the assessee had concealed the income derived by him from the sale of cycle parts which he had imported. These transactions, according to the ITO, were outside the books. Consequently, he obtained details of the transactions of sale made by the assessee in respect of the imported cycle parts and calculated profit on the same at the rate of Rs. 4 per set (consisting of one pair of hub, a chain and a free-wheel) as against Rs. 3 per set admitted by the assessee, in respect of 4,791 sets. Thus, the ITO added a sum of Rs. 19,164 to the income shown by the assessee. Certain other additions were also made but we are not concerned with the same. Suffice it to say that he computed the total income of the assessee at Rs. 55,248 by his order dated October 29, 1963 (annex. A). The ITO also issued notice to the assessee to show cause why penalty be not imposed on him under section 271(1)(c) of the Income-tax Act, 1961 (which will hereinafter be referred to as " the Act ").

3. Dissatisfied with the order of the ITO, the assessee filed appeal before the AAC, who, by his order dated October 12, 1964, held that the rate of profit on each set of the imported cycle parts sold by the assessee should have been calculated at Rs. 8 per set instead of Rs. 4, as was done by the ITO. However, he found that the total number of sets sold by the assessee was only 2,291 as against 4,791 determined by the ITO. Calculated on the revised basis, he assessed the income from the sale of the cycle parts at Rs. 18,328 as against Rs. 19,164 determined by the ITO. The assessee filed further appeal to the Tribunal which maintained the addition of Rs. 18,328 as determined by the AAC. The copies of the orders of the AAC and the Tribunal have also been submitted by the Tribunal and are marked annexs. "B" and " C", respectively.

4. Adverting to the penalty proceedings, since the amount of penalty involved was more than Rs. 1,000, the ITO submitted the proceedings to the IAC, who, by his order dated October 22, 1965 (annex " D "), imposed a penalty of Rs. 9,700 on the assessee. It may be relevant here to mention that while determining the quantum of penalty, the IAC took into consideration the concealed profit on the sale of cycle parts as well as two more items of concealed profit and thus imposed the penalty of Rs. 9,700 on concealed income of Rs. 32,969. The assessee filed appeal before the Tribunal from the order of the IAC. The Tribunal held that the onus lay wholly upon the department to prove that the assessee had actually made profits higher than what he had disclosed. It went on to observe that a mere estimate of the possible profit, which may incidentally be very much higher than what was disclosed by the assessee, cannot be treated as proof of concealment of income on the part of the assessee. In conclusion it held that the department had failed to prove concealment of profit on the part of the assessee and, thus, no penalty could be imposed in respect of the income derived by the assessee from the sale of the imported cycle parts. The Commissioner made an application before the Tribunal requiring it to state the case and refer the question of law arising out of its order, but the application was refused. Thereupon, the Commissioner filed an application before this court under section 256(2) of the Act, on which this court directed the Tribunal to state the case and refer the following question of law :

" Whether, on the facts and circumstances of this case, the Tribunal was justified in holding that the assessee had not concealed the profits on the sale of sets of cycle parts so as to attract penalty under section 271(1)(c) of the Income-tax Act ? "

5. From the undisputed facts stated above, it is amply clear that, according to the assessee himself, he had derived income from the sale of imported cycle part sets which he had not recorded in his books of account and which he had also not shown in the return. It is further admitted by him that he had made profit at the rate of Rs. 3 per set. Thus, there is no escape from the conclusion that the assessee had admittedly concealed the profits on the sale of sets of cycle parts. The mere fact that the ITO estimated the rate of profit at Rs. 4 per set and the AAC, in disagreement with the ITO, assessed the profit at the rate of Rs. 8 per set, has no relevance to the question of concealment of the profits made by the assessee. In our opinion, there was no justification for the Tribunal to hold that the department had not discharged the onus of proving that the assessee had concealed the profits when the assessee himself had admitted that he had not shown the income derived by him from the sale of the imported sets of cycle parts and that the same may be added to his assessable income. In such circumstances, the conclusion is irresistible that the assessee had concealed the income.

6. We are of the opinion that in a case where the assessee himself has admitted that the amount in question represented his income, no further evidence would be necessary to show that it was the amount which represented his income and/or that it represented his concealed income. In the present case, the assessee had agreed that he had derived income from the sale of the imported sets of cycle parts. There is also no denying of the fact that this income had not been recorded in the books of account and the assessee did not show this income in the return though he readily agreed to its inclusion. In these circumstances, the levy of penalty by the IAC was justified. In this view of the matter, the Tribunal was not justified in holding that the assessee had not concealed the profits on the sale of imported sets of cycle parts so as to attract penalty under section 271(1)(c) of the Act.

7. We, therefore, return the answer to the question in the negative, that is, in favour of the department. Since the assessee has not appeared to contest the reference, there will be no order as to costs.Reference answered in favour of departments.

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