COMMISSIONER OF INCOME TAX Vs. JALARAM OIL MILLS

JUDGEMENT

(1.) At the instance of the Commissioner of Income-tax, Rajkot, the Income Tax Appellate Tribunal, Ahmedabad Bench 'A' has referred the following question for the opinion of this Court :

(2.) The Assessment Year under consideration is 1971-72 and the accounting period relevant for the said Assessment Year is S.Y. 2026. The assessment under sec. 143(3) was framed by the Income-tax Officer on 28th March 1974. As against returned income of Rs. 9,720.00, the assessee was assessed on a total income of Rs. 40,189.00 by making an addition of Rs. 27,500.00 as income from undisclosed source in respect of certain amounts credited in the name of six different creditors, apart from various disallowances with which we are not concerned at present. The ITO initiated proceedings under sec. 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') and referred the matter to the Inspecting Assistant Commissioner (IAC) as required under the provisions as they then stood. The IAC levied a penalty of Rs. 30,000.00 under sec. 271(1)(c) of the Act read with Explanation thereto by his order dated 10th March 1976.

(3.) The said order was challenged by way of appeal before the Tribunal and the Tribunal, for the reasons stated in its order dated 16th November 1977, held that the penalty in question cannot be sustained and thus allowed the appeal. It is this order from which the aforesaid question has been referred to this Court.