USHA FERTILIZERS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Ahmedabad Bench 'A' has referred the following question :

(2.) THE assessment year is 1975-76 and the relevant accounting period is year ended on 30th June, 1974. The applicant-assessee is a partnership-firm which came into existence w.e.f. 1st April, 1974, under a deed executed on 2nd April, 1974. The said partnership comprised of one Shri on 2nd April, 1974. The said partnership of one Shri Arvindkumar Babubhai and Smt. Kokilaben Chandravadan. Said Shri Arvindkumar was a student of first year in college.

(3.) MR . S.N. Divertia, learned advocate appearing on behalf of the applicant-assessee submitted that the penalty had been wrongly levied and confirmed by the authorities below. In support of this proposition it was submitted that the assessee had tendered its explanation to the effect that it had borrowed various sums from different parties and instructed the accountant one Shri Mohanbhai D. Patel at the relevant point of time to pass necessary credit entries in the books of account, but the said accountant had failed to do the needful and the assessee came to know about the same only when its explanation was sought by the ITO during the course of assessment proceedings. It was further submitted that at that point of time a period of four years had elapsed and the assessee was not in a position to give the names of the persons from whom the borrowings had been made because the assessee did not remember the names of the said persons. It was further submitted by him that the assessee had placed complete faith on the accountant and at the relevant point of time when the assessment proceedings were going on the relations with the accountant had been strained resulting in assessee being unable to substantiate its explanation. In support of the submission that on these set of facts and circumstances no penalty was leviable reliance was placed on the following three decisions of this Court :