COMMISSIONER OF INCOME TAX Vs. B RAMANUJAM THAMPI

JUDGEMENT

(1.) THE following question at the instance of the Commissioner of Income -tax, Kerala -I, Ernakulam, has been referred to this court for its opinion :

(2.) THE year of assessment is 1969 -70, the accounting year ending March 31,1969. The facts lie in a narrow compass. On November 10, 1966, the assessees purchased a 'grape garden' at Hyderabad for Rs. 2,95,000. The consideration was paid by drawing movies from the firm, the National Cashew Company, of which the assessees are partners. From the 'grape garden', the assessees, for the year in question, had made a profit of Rs. 4,94,137. The assessees are entitled to equal shares in the said profit. The assessees, however, had not included this receipt in the returns they had furnished for the year in question on the ground that this profit represented only agricultural income. The Income -tax Officer accepted the returns and made the assessments.

(3.) THE Income -tax Officer thereafter initiated penalty proceedings under section 271(1)(c) of the Income -tax Act and since the minimum penalty imposable would exceed a sum of Rs. 1,000, he referred the matter to the Inspecting Assistant Commissioner in terms of section 274(2), as it stood then. The Inspecting Assistant Commissioner, after hearing the assessees, found that there was concealment of income and accordingly a sum of Rs. 50,000 was levied as penalty on each of the assessees. Annexures C -1 to C -6 are the penalty orders. The assessees filed appeals before the Appellate Tribunal. The Appellate Tribunal consolidated all the appeals and disposed of them by a common order, annexure D. The Appellate Tribunal set aside the orders levying penalty on the ground that it was not the assessees who had concealed the particulars of income but a firm of which they are the partners.