MANASVI D M Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference under S. 256(1) of the IT Act, 1961 (hereinafter referred to as the Act), the following questions have been referred to us by the Tribunal :

(2.) THE assessee, who is the applicant before us, is an individual and the relevant assessment years are 1959 60, 1960 61, 1961 62 and 1962 63. So far as the asst. yrs. 1959 60 and 1960 61 were concerned, the assessee was initially assessed under S. 23 of the IT Act, 1922. However, the ITO subsequently found that the income from the business, which was carried on in the name of M/s Kohinoor Grain Mills Sales Depot, was not included in the returns filed by the assessee; nor had the assessee shown any connection or interest with the said business so far as the asst. year 1959 60 was concerned. For the remaining three years, 1960 61, 1961 62 and 1962 63, the assessee had only disclosed 20per cent as his share of the profit of the said M/s Kohinoor Grain Mills Sales Depot (hereinafter referred to as the alleged firm). The ITO was of the opinion that the alleged firm was not a genuine partnership but was the sole proprietary concern of the assessee and the whole of the income from the alleged firm belonged to the assessee. Therefore, the ITO reopened the assessment for the years 1959 60 and 1960 61 and so far as the asst. year 1961 62 was concerned, he assessed the income of the assessee by including the entire income of the alleged firm in the income of the assessee. The reassessment proceedings were carried out under the provisions of the 1961 Act and, for the asst. yr 1961 62, the assessment was under S. 23 of the Act of 1922 and, for the asst. year 1962 63, the assessment was under S. 143 of the Act of 1961. The non disclosure of the business profits of the alleged firm was considered by the ITO to represent deliberate concealment and so he initiated penalty proceedings under S. 271 for all the four assessment years. As the minimum penalty leviable under S. 271(1)(c) exceeded the sum of Rs. 1,000 in each of these four years, the cases were referred to the IAC under the provisions of S. 274 (2) of the 1961 Act. After giving an opportunity to the assessee of being heard and after hearing the assessee, the IAC came to the conclusion that the assessee had concealed his income and deliberately furnished inaccurate particulars for all the four assessment years and he, therefore, levied penalties for each of the four assessment years in question. Against the decision of the IAC levying penalties for the four years, the assessee appealed to the Tribunal and the Tribunal upheld the order of penalty so far as the question of levying the penalty was concerned but the quantum of penalty was reduced for some of the assessment years. Thereafter, at the instance of the assessee, the above two questions have been referred to us by the Tribunal.

(3.) AT the hearing of the reference before us, Mr. Kaji, on behalf of the assessee, urged the following two points. He firstly contended that both under the provisions of the Act 1922 and also under the provisions of the Act of 1961, it was necessary that the penalty proceedings must start in the course of and during the pendency of the assessment proceedings; and it was his contention that the penalty proceedings were not properly commenced in the course of the assessment proceedings under the new Act; and his second contention was that, so far as the facts of the instant case were concerned, there was no material or evidence before the Tribunal to hold that the assessee had deliberately concealed particulars of his income or deliberately furnished inaccurate particulars of his income as required by S. 271(1)(c) of the Act of 1961.