P T OOMMEN Vs. CIT

JUDGEMENT

(1.) This reference by the Income Tax Appellate Tribunal, Cochin Bench arises from penalty proceedings initiated by the Additional income tax Officer, Quilon in respect of the assessment year 1959-60. The Additional Income Tax Officer imposed a penalty of Rs. 10,000/- under S.28(1)(c) of the Income Tax Act, 1922 (in brief the Act). This was confirmed by the Appellate Assistant Commissioner. The imposition of penalty was upheld by the Tribunal, but the quantum of penalty was reduced to Rs. 5,500/-. The Tribunal refused to state the case on the ground that no question of law arises when the assessee applied under S.66(1) of the Act. The assessee thereupon filed O. P. No. 2300 of 1968 under S.66(2) of the Act. In compliance with the directions contained in the judgment of this Court in that original petition the Tribunal has referred the following question:

(2.) The assessment for the assessment year 1959-60 was completed by the Income Tax Officer as per his order dated 15-8-1960. The total income brought to tax in respect of that year was Rs. 60,537/-. The break up of this amount was Rs. 125/- under 'property', Rs. 29,912/- under 'business' and Rs. 30,500/- under 'other sources'. The amount covered by the last head represented unexplained credits in a suspense account maintained by the assessee. In appeal against the assessment order, the Appellate Assistant Commissioner sustained the addition under 'other sources' to the extent of Rs. 22,500/-. This was confirmed by the Tribunal also in further appeal by the assessee against the assessment order.

(3.) During the assessment proceedings, the Income Tax Officer issued notice under S.28(3) of the Act on 15-8-1960. The assessee by Annexure 'A' reply dated 15-9-1960 repudiated the charge that he has concealed the particulars of his income or deliberately furnished inaccurate particulars of his income. He therein reiterated that the amounts brought to tax under the head of 'other sources' are amounts borrowed. He also stated that the Income Tax Officer made the addition in respect of these amounts only on the ground that his creditors who lent the amounts gave different versions before the Income Tax Officer. He pointed out that the creditors themselves had admitted before the Income Tax Officer that they have advanced the amounts, and that, though they gave different versions 'they at no time denied their having made the advances'. He contended' "The mere fact that you suspect that the borrowings were my concealed profit without adducing definite proof therefor does not make the borrowings my concealed income and the non inclusion of the borrowing in my total income does not make me liable for the penal provisions of the Act."