K NALINI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This reference is at the instance of the assessee and the relevant assessment year is 1976-77. The questions of law referred are as follows:

(2.) The assessee is an individual carrying on business in the purchase and sale of handloom clothes. For the assessment year 1976-77, the assessee filed the return of income on 12.6.1977 declaring a total income of Rs. 1,43, 470/-. The assessment was completed on 4.6.1979 determining the total income at Rs. 7,22,350/-. During the assessment proceedings, it was found that the assessee had concealed an amount of Rs. 57,294/-. Hence, penalty proceedings were initiated under S.271(1)(c) of the Income Tax Act (hereinafter referred to as 'the Act'). The assessment order was challenged in appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) passed an order on 24.3.1980. The Appellate Authority while upholding the additions to the extent of Rs. 57,294/- set aside the assessment order with direction to redo the same after examining certain details relating to the assessee's claim of shrinkage of cloth.

(3.) Thus, the matter came back. After remand, the Assessing Officer issued a notice under S.148 of the Act on 27.11.1981 to reopen the assessment. In response to the notice, the assessee filed a return of income on 2.1.1982 declaring a total income of Rs. 2,16,730/-, which included a sum of Rs. 57,294/-, which had already been confirmed by the Commissioner of Income Tax (Appeals). The Assessing Officer passed the order of assessment under S.143(3) read with S.251 and S.147(a) of the Act on 21.2.1986 determining the total income at Rs. 2,41,930/-. The Assessing Officer again issued a notice under S.274 read with S.271(1)(c) of the Act on 21.2.1986 calling for the assessee's explanation as to why penalty should not be levied for concealment of income. Penalty of Rs. 45,000/- was levied under S.271(1)(c) of the Act on 24.3.1988 treating the sum of Rs. 57, 294/- as the income concealed by the assessee. This was confirmed by the Commissioner of Income Tax (Appeals). The matter was taken up before the Income Tax Appellate Tribunal.