COMMISSIONER OF INCOME TAX Vs. MOHD MASOOM

JUDGEMENT

(1.) : These two applications (Nos. 56 & 57 of 1981) under s. 256(2) of the IT Act, 1961 (`the Act'), seek a reference to this Court in respect of penalty cases against the assessee. They relate to the asst. yrs. 1973-74 & 1974-75. The assessment orders against the assessee in these two years were passed on certain undisclosed income. In the asst. yr. 1973-74, numerous additions were made to the income of the assessee, but it appears that a sum of Rs. 23,000 out of the addition was confirmed by the Tribunal. The addition to the income was based on the purchase of a car by the assessee in April 1972. The explanation was that he had purchased the car with the help of two loans of Rs. 13,000 & 20,000 each taken from his material grandmother and his mother's sister. This explanation was not accepted and the amount was added to the assessee's income. The Tribunal held in the penalty case that the mere fact that the explanation was not accepted would not result in its being treated as concealed income for the purposes of s. 271(1)(c) of the Act. This was a question of fact, which clearly seems to be correct.

(2.) FOR the asst. yr. 1974-75, the amount which was added by the ITO was Rs. 7,17, 500 and Rs. 9,990. Out of this, only Rs. 19,300 were confirmed by the Tribunal and that was also after a reduction of Rs. 9,990. The explanation of the assessee was that these were loans from Aftab Ahmed, Smt. Bismillah Begum and two other persons, but the Tribunal did not accept this explanation. When the penalty case came before the Tribunal, it was of the view that a penalty could not be imposed and the reference has been refused on the ground that it is not a question of law. Again, it is a case of an explanation not being accepted regarding some unexplained amount. But, it is a question of fact whether there has been actual concealment of any income. We agree that no reference could be directed in these circumstances.