COMMISSIONER OF INCOME TAX Vs. RAM NIWAS AGRAWAL

JUDGEMENT

(1.) For the assessment year 1962-63, the ITO acting under Section 271(i)(c) of the I.T. Act, imposed a penalty of Rs. 25,031 on the assessee. Eventually, in appeal, the Income-tax Appellate Tribunal quashed the imposition of that penalty. At the instance of the revenue, this court called upon the Tribunal to state the case and to refer the following question for the opinion of this court:

(2.) The Tribunal has accordingly stated the case for our opinion.

(3.) It appears that in the course of assessment proceedings for the assessment year 1963-64, the ITO came across certain hundi loans alleged to have been taken by the assessee for the purposes of its business. When the ITO started enquiry into the genuineness of those credits, the assessee surrendered an amount of Rs. 55,000, representing such hundi loans, to be added to its total income for the assessment year 1963-64. That amount was accordingly added to its total income and the assessment for that year was completed. Thereafter, the AAC imposed a penalty of Rs. 30,000 on the assessee under Section 271(1)(c) of the I.T. Act for the assessment year 1963-64. Against that penalty, the assessee filed an appeal before the Tribunal and contended that although an amount of Rs. 55,000 was surrendered by the assessee for addition for that assessment year, the whole of such hundi loans did not relate to the accounting year relevant for that assessment year. Some of the credits representing hundi loans appeared in the books of account of the assessee in the earlier accounting years. It was submitted that an amount of Rs. 15,000 related to the assessment year 1959-60, an amount of Rs. 10,000 to the assessment year 1961-62, an amount Rs. 20,000 to the assessment year 1962-63, and that fresh credits during the accounting year relevant for the assessment year 1963-64, amounted to only Rs. 10,000. Thus, it was pleaded before the Tribunal that the entire amount of Rs. 55,000, though surrendered for assessment for the assessment year 1963-64, did not represent the concealed income of that year. The plea raised by the assessee prevailed with the Tribunal and it held that for the assessment year 1963-64, the assessee was liable to penalty on the concealed income of Rs. 10,000 only.