COMMISSIONER OF INCOME TAX Vs. NAMLABHAI BHANABHAI

JUDGEMENT

(1.) THE assessee, an individual, filed his return of income for the asst. year 1969 70 in response to a notice under S. 139(2) of the IT Act, 1961 (hereinafter called the Act"). While declaring his total income to be nil, he stated in Part IV of the revised return that he had received an amount of Rs. 1,16,500 as prize money from Makam Sahitya Harifai, a crossword competition. After recording the assessee's statement on December 18, 1970, the ITO came to a tentative conclusion that the claim stated in Part IV of the revised return was not a genuine one. Notice under s.142(1) of the Act was, therefore, issued calling upon the assessee to furnish certain information regarding his investments and expenditure in the prescribed form. Since the assessee failed to comply with this notice, the assessment was completed under S. 144 of the Act. The ITO after appreciating the evidence on record came to the conclusion that the claim of Rs. 1,16,500 was a false claim. In his view, the assessee had brought out unaccounted money by showing it as prize won in a crossword competition. The ITO, therefore, taxed the amount as assessee's income from undisclosed source. The sum of Rs. 11,657 was further added being the commission amount paid by the assessee to the organisers of the crossword competition for declaring the prize money and thereby assisting him to bring out his unaccounted money. The ITO then initiated proceedings under S. 271(1)(c) of the Act and referred the matter to the IAC who, after considering the contentions raised on behalf of the assessee, concluded that the assessee had concealed his income and furnished inaccurate particulars thereof and was, therefore, liable to penalty under the aforesaid provision. Penalty of Rs. 1,35,000 was, therefore, imposed.

(2.) THE assessee feeling aggrieved by the order passed by the IAC preferred an appeal to the Tribunal. The Tribunal following the decision in the case of Jogibhai Mangalbhai vs. ITO, in Income tax Application No. 373 of 1974 75 decided on 18th October, 1975, held that the penalty levied by the IAC could not be sustained and accordingly cancelled the same. The Revenue feeling aggrieved by this order of the Tribunal sought a reference under S. 256(1) of the Act on as many as five questions. The Tribunal, however, referred the following two questions for our opinion :

(3.) SINCE such a question has not been formulated in the reference before us, the Revenue filed an application being Income tax Application No. 72 of 1977 seeking a reference on three other points with a view to focussing attention to the Explanation to S. 271(1)(c) of the Act and with a view to pointing out that there was gross and wilful negligence on the part of the assessee and the assessee had practised fraud and was, therefore, liable to penalty under the said provision. We would have been inclined to formulate an additional question on the lines of question No. 2 framed in Suleman Abdul Sattar's case (supra), but since the words "concealed his income" have been specifically used in question No. 1, we think that its coverage is sufficiently wide to include question No. 2 framed in the aforesaid case. We, therefore, do not think it necessary to frame any additional question, as requested by the said application and we, therefore, dispose of the application accordingly.