LAWS(ALL)-1990-8-43

COMMISSIONER OF INCOME TAX Vs. AGARWAL R K

Decided On August 20, 1990
COMMISSIONER OF INCOME-TAX Appellant
V/S
R.K. AGARWAL Respondents

JUDGEMENT

(1.) UNDER Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the Tribunal has referred the following two questions :

(2.) THE assessee is an individual. He was a partner in Messrs. Hindustan Automobiles. Kanpur. He derived income both from the firm as well as certain interest income. He filed a return showing an income of Rs. 11,787 for the assessment year 1968-69. THE Income-tax Officer completed the assessment on a total income of Rs. 1,29,838. He added Rs. 30,000 as income from undisclosed sources which included a deposit of Rs. 20,000 in the name of Shri Dilbagh Mehra. Having completed the assessment, the Income-tax Officer initiated penalty proceedings under Section 271(1)(c) of the Act. THE assessee furnished an explanation. THE Income-tax Officer rejected the explanation and imposed a penalty against which an appeal was preferred before the Appellate Assistant Commissioner. It was dismissed. THE matter was then carried to the Tribunal. THE Tribunal, applying the ratio of the decision of the Supreme Court in CIT v. Anwar Ali [1970] 76 ITR 696, found that mere rejection of the assessee's explanation is not sufficient to impose penalty under Section 271(1)(c) of the Act, in the absence of any material on the basis of which a conclusion could be drawn that the assessee either concealed any income or filed inaccurate particulars of his income. THE Tribunal found as follows :

(3.) ACCORDINGLY, we answer the two questions referred in the affirmative, i.e., in favour of the assessee and against the Department with no order as to costs.