COMMISSIONER OF INCOME TAX Vs. SHAMA MAGAZINE

JUDGEMENT

(1.) IN respect of the penalty proceedings for the asst. year 1964 -65, the following question has been referred by the Tribunal under S. 256(2) of the INCOME TAX ACT, 1961 :

(2.) THE petitioner filed a return for the year relevant to the asst. year 1964 -65 declaring a total income of Rs. 7,883. It is unnecessary to refer to various details of the income except to state that the ITO added a sum of Rs. 25,000 shown as credited in the name of one Nawab Ahmed. The assessee never produced any evidence in support of his explanation that the amount was deposited by the said Nawab Ahmed in spite of several opportunities. The amount was shown as deposited by cash. The said Nawab Ahmed was also not assessed to any tax nor any interest was paid to him. In the circumstances, the ITO found that this deposit of Rs. 25,000 in the name of Nawab Ahmed was the income of the assessee from undisclosed sources. It was accordingly added to the income of the assessee. The ITO also initiated proceedings under S. 271(1)(c) of the Act proposing to levy penalty. Even when the said proceedings reached the Tribunal, the subject of assessment was still pending before the AAC. However, it is clear that as of today the addition of this amount has been affirmed. The Tribunal accepted the appeal of the assessee against the levy of penalty. The relevant observations of the Tribunal in this regard are as follows :

(3.) BEFORE proceeding further, it will be useful to refer to S. 271(1)(c) along with its Explanation. As per the main S. 271(1)(c) when the concerned authority in the course of any proceedings under the Act is satisfied that any person "has concealed the particulars of his income or furnished inaccurate particulars of such income, the authority may direct that such person shall pay by way of a penalty...." The Explanation which is relevant here reads as follows :