NANDLAL KANAIYALAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) FOR the year 1967-68, the assessee filed his return of income on 23rd Dec., 1968. The income disclosed was Rs. 10,951. FOR the subsequent two years, the assessee filed his returns on 10th Oct., 1969 and 30th Sept., 1970. On 23rd Dec., 1969, the IT Department had carried out a raid at the place of the father of the assessee and seized certain documents. On 18th May, 1971, a notice was given to the assessee under s. 143(2) of the IT Act, 1961. Thereafter, that is on 21st July, 1971, the assessee filed a revised return of his income disclosing that his income was Rs. 26,611. The ITO on verification of the books of accounts of the assessee found that the assessee had not given details of the amount received as brokerage and, in absence of the vouchers or receipts, the correctness of the amounts received was not verifiable. He, therefore, made maximum addition of Rs. 2,000 and determined the income of the assessee at Rs. 28,611. While passing the order of assessment, the ITO also directed that a notice be issued to the assessee under s. 274 for penalty under s. 271(1)(c) of the Act, inasmuch as, the assessee had furnished inaccurate particulars of his income. In the proceedings initiated under s. 271(1)(c), the ITO held that the assessee's intention at the time of filing the original return was 'not that of innocence' and that the assessee had deliberately understated his income as could be seen from his subsequent admission that his real income was Rs. 26,611. The ITO also held that Expln. to s. 271(1) was also attracted and that the assessee failed to discharge the burden which arose as a result of deeming fiction created by the Explanation. FOR coming to the conclusion that the original return filed by the assessee was not voluntary and bona fide, the ITO relied upon four circumstances: (i) the assessee had filed copy of his capital account along with the return of income for the asst. yrs. 1969-70 and 1970-71 also and that would mean that till 30th Sept., 1970, he had not discovered the mistake and that was not believable; (ii) in the previous year, the assessee had received brokerage of Rs. 12,997; whereas for the relevant year, he had disclosed brokerage of Rs. 7,864 only; (iii) the revised return was filed after the raid at the residential as well as business premises of his father on 23rd Dec., 1969 and that indicated that it was filed under an apprehension of 'deeper probe in his financial affairs' by the Department; and (iv) the assessee had filed the revised return after he had received the notice under s. 143(2) of the Act. The ITO levied maximum penalty of Rs. 31,320. This order of penalty was challenged by the assessee by filing an appeal before the AAC but without any success. The second appeal to the Tribunal also met with the same fate. Thereupon, the assessee moved the Tribunal to refer the following four questions to this Court on the ground that they arose out of the order of the Tribunal :

(2.) IT may be stated that even though the Tribunal refused to refer question Nos. 2 to 4 to this Court, the assessee had not moved this Court under s. 256(2) of the Act and, therefore, we are required to answer question No. 1 only, bearing in mind that the Tribunal has refused to refer questions Nos. 2 to 4 to this Court. Not only that, but question No. 1, that is, the question referred to us will have to be answered in the context of the findings recorded by the Tribunal and which findings are now no longer open to challenge.

(3.) WE, therefore, answer the question in the affirmative, that is, against the assessee and in favour of the Revenue. Reference is disposed of accordingly. No order as to costs.