N.A. MALBARI AND BROS. versus COMMISSIONER OF INCOME-TAX, BOMBAY

Citation: [1964] 5 S.C.R. 560 · Decided: 25-11-1963 · Supreme Court of India · Bench: A.K. SARKAR · Disposal: Dismissed

Judgment (excerpt)

560 
SUPREME COURT REPORTS 
(1964] 
1963 
pute must be governed by Rule S(a)(i) of the respon-
dent's Standing Orders. 
Workmen of 
Dewan Tea 
In the result, we reverse the finding of the Tribunal 
Estate and Ors. !hat the lay <!ff 4eclared by the .respon~e!lt for 45 days 
v 
m 1959 was Justified. That bemg so, 1t 1s unnecessary 
"''he M 
· g 
t to consider the individual cases of the nine respective 
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ana emen 
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b 
h 
h 
b 
h · 
compames, 
ecause w atever may 
ave 
een t elf 
Gajendragadkar respective financial position, under the relevant Rule 
J. 
they could not validly declare a lay off at all, nor 
could they have declared the lay off in exercise of 
their alleged common law right. The questions referred 
to the Tribunal must, therefore, be answered in favour 
of the appellants. The appeal is accordingly allowed 
and the appellants' claim for full wages for the 45 
days of lay off in respect of the 
11 tea gardens is 
awarded to them. The appellants will be entitled to 
their costs throughout. 
1963 
November. 25 
Appeal allowed. 
N.A. MALBARI AND BROS. 
v. 
COMMISSIONER OF INCOME-TAX, BOMBAY 
(A.K. SARKAR, M. HIDAYATULLAH AND J.C. SHAH, 
JJ.) 
Income Tax-Penalties-One earlier, the second on disclosure 
of full facts-Whether justifiahle-Tncome-tax Act, 1922 (II of 
1922), s. 28. 
The appellant, a firm of Surat, had a branch at Bangkok, 
to which it exported cloth, and the branch also made purchases 
locally and sold them. During the war the business of the branch 
had been in abeyance, but was re-started after the termination of 
the hostilities. In its return for the assessment year 1949-50 the 
appellant did not include any profit of the branch, but stated that 
the books of account of branch were not available, and therefore 
its profits might now be assessed on an estimate basis subject to 
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5 S.C.R. 
SUPREME COURT REPORTS 
561 
action under s. 34 or 35. The assessment was made on the basis 
1963 
of profit at 5 % 011 the export to the branch appearing in the Surat 
books. A similar estimate was made for year 1950-51. For the N.A. Malbari 
year 1951-52 also the business profits of the branch were not shown 
and Bros. 
but the Income-tax officer issued a notice to the assessee to produce 
v 
the relevant accounts and books. The appellant excused itself by 
. ·. 
promising that in the following year these accounts for the year Commissioner 0! 
19:0 would be produced. Thereupon the Income-tax Officer made 
Income-tax, 
an estimate of the sales of the branch and of the net profits at 5 % 
Bombay 
thereon, amounting to Rs. 37,500/-, and the same day he issued a 
notice to show cause why a penalty for concealment of the parti-
culars of the income of 1951-52 should not be levied. Subsequently, 
the Income-tax Officer imposed a penalty of Rs. 20,000/- on it as 
its explanation was not acceptable. In the meantime assessment 
proceedings for the year 1952-53 had commenced and the appellant 
adopted a similar attitude. The Income-tax Officer was insistent 
and, therefore, appellants had to produce the accounts and books 
of the branch, from which it appeared that for the year 1951-52 
the appellant had made a profit of Rs. 1,25,520/-. The Income-tax 
Officer issued a further notice to the appellant to show cause why 
penalty should not be levied for deliberately concealing income for 
the year 1951-52. Pursuant to this notice the Income-tax Officer 
passed another order imposing a penalty of Rs. 68,501/-. The 
appellant's appeal to the Appellate Assistant Commissioner against 
both the orders of penalty was rejo c'.ed. 
On appeal, the Tribunal 
cancelled the first order of penalty but confirmed the second one. 
Thereafter, the appellant obtained a reference to the High Court 
of the question: "Whether the levy of Rs. 68,501/- as penalty for 
concealment in the original return for the assessment year 1951-52 
is legal?" The High Court cm·,vercd the question in the affirmative. 
On appeal by special leave it was urged that the second order for 
penalty was illegal because there was one concealment and in respect 
of that a penalty of Rs. 20.000/- had earlier been imposed, that 
there was no jurisdiction to make the second order of penalty 
while the first order stood and for that reason the second order 
must be treated as a nullity: and that the fact that the first order 
was subsequently cancelled by the Tribunal would not set the second 
order on its feet for it was from the beginning 

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