COMMISSIONER OF INCOME TAX Vs. KULWANT KAUR SMT

JUDGEMENT

(1.) THE Tribunal, Delhi Bench "A", has referred the following question of law for the opinion of this Court under S. 256(1) of the INCOME TAX ACT, 1961 (for short "the Act") :

(2.) GURBACHAN Singh was carrying on his business as a sole proprietor in the name of M/s General Radiator Workshop and was engaged in the manufacture and sale of car radiators and components thereof. For the asst. year 1965 -66, he filed his return of income declaring a total income of Rs. 13,831. This was on October 15, 1965. Before the assessment was made, he filed a revised return of his income on November 13, 1969, declaring an income of Rs. 7,393. Gurbachan Singh died and was represented in the assessment proceedings by his legal representatives, Smt. Kulwant Kaur, his wife, etc. The difference between the incomein these two returns was due to the fact that in the original return, the assessee did not claim depreciation. This was the only change effected in the revised return. During the course of the assessment proceedings, the ITO called upon the assessee to file an inventory of his closing stock as on the last day of the accounting year, i.e., March 31, 1965. When this was done, the ITO found that the assessee was enjoying overdraft facilities with Lakshmi Commercial Bank Ltd., Kamla Nagar, Delhi. He, therefore, asked the assessee to file a certificate from the bank regarding the stocks pledged with the bank for the purposes of the overdraft. On examination of the statement filed, it was found that certain raw materials valued at Rs. 26,943, which were found mentioned in the statement of stock pledged with the bank, were not shown in the list of closing stock as per the inventory filed by the assessee. The ITO did not accept the explanation of the assessee and added the sum of Rs. 26,943 as the assessee's income from undisclosed sources on the ground that this represented unaccounted stock of the assessee.

(3.) THE Tribunal, on appeal by the assessee, agreed with the conclusion of the IAC that, in the facts and circumstances of the case, a penalty was called for. The Tribunal was, however, of the view that the penalty should be computed on the basis of the tax sought to be evaded in accordance with the provisions of S. 271(1)(c) of the Act, as they stood prior to their amendment on April 1, 1968, and directed that minimum penalty should be levied in the instant case. At the instance of the CIT, the question set out above was referred for decision of this Court.