COMMISSIONER OF INCOME TAX Vs. DALMIA R

JUDGEMENT

(1.) THESE are two petitions by the Revenue under S. 256(2) of the INCOME TAX ACT, 1961 ("the Act"), for an order directing the Tribunal to state a case to this Court and to refer certain questions of law formulated by the Revenue arising out of the order dated March 24, 1975, of the Tribunal. At the conclusion of the hearing on January 4, 1980, we announced our decision. We dismissed the applications. Now, we give our reasons. The Tribunal by order dated February 13, 1976, held that no question of law arose and the findings in question were essentially findings of fact. The Tribunal rejected the applications made to it under s. 256(1) of the Act. Hence these petitions to this Court.

(2.) THE respondent, late Shri R. Dalmia, was the assessee. In the asst. year 1954 -55, Rs. 14 lakhs were added to his income from undisclosed sources because he could not explain to the satisfaction of the revenue authorities the origin of a cash credit of a corresponding amount in his name in the books of Bharat Union Agency Ltd., a concern under his control. This addition was finally upheld by the Tribunal. As a sequel a penalty of Rs. 12 lakhs was imposed on the assessee by the Revenue authorities on the charge of having concealed his income to the extent of Rs. 14 lakhs for the asst. year 1954 -55. The Tribunal by order dated March 24, 1975, cancelled the penalty. They took the view that the charge of concealment of income had remained unproved.

(3.) NOW , it is a straightforward case of unacceptability or falsity of the explanation given by the assessee. In the leading decision of CIT vs. Anwar Ali (1970) 76 ITR 696 (SC), the Supreme Court laid down the principle that before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. The Court said :