COMMISSIONER OF INCOME TAX Vs. LALLUBHAI JOGIBHAI PATEL

JUDGEMENT

(1.) THE Tribunal, Ahmedabad Bench "C", has referred the following question for the opinion of this Court under s. 256(1) of the IT Act, 1961 :

(2.) DURING the course of operation under s. 132 of the Act on the 30th Nov., 1974, a Mercedez car was found parked in the premises of the assessee. The registration book, a servicing bill and a blank transfer form signed by the owner of the vehicle were also recovered from the premises. As the assessee did not disclose the source of income by which he had acquired the said vehicle, an amount of Rs. 65,000, representing the investment, was added to the total income of the assessee and a notice under S. 274 r/w s. 271 was issued to show cause as to why penalty under S. 271(1) (c) should not be levied on the assessee. The addition to the total income in respect of the investment in the car was, ultimately, scaled down to Rs. 56,000 by order dt. the 19th March, 1983, passed by the CIT(A). The assessee, in response to the notice, kept on shifting his stand, in his letters dt. 16th Jan., 1980, and 25th Feb., 1980, he stated that the car was purchased only for Rs. 31,000. The ITO, by his order dt. the 23rd Sept., 1983, held that the assessee had deliberately concealed the particulars of income to the extent of Rs. 56,000 utilized by him for acquiring the car and, therefore, was liable to penalty. The penalty equal to 100 per cent of the income concealed was imposed on the assessee.

(3.) THE learned counsel appearing for the Revenue argued that the Explanation to cl. (c) of s. 271 (1) was attracted in this case and the entire amount of Rs. 56,000, being the price of the car purchased, should be treated to have been an income deemed to have been concealed under the Explanation. It was submitted that, once a presumption arose under the Explanation, the minimum penalty of 100 per cent of the amount concealed was called for and, therefore, the Tribunal ought to have restored the entire penalty of Rs. 56,000 and not mere Rs. 31,000.