ADDITIONAL COMMISSIONER OF INCOME-TAX Vs. MANGALSEN MOHANLAL

JUDGEMENT

(1.) In compliance with the direction of this court, at the instance of the Additional Commissioner of Income-tax, Kanpur, the Income-tax Appellate Tribunal, Delhi Bench 'A' (hereafter "the Tribunal") has drawn up a statement of the case and referred the following questions for the opinion of this court:

(2.) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally justified in cancelling the penalty imposed upon the assessee in terms of the Explanation, to Section 271(1)(c) of the Income-tax Act, 1961 ?"

(3.) Pursuant to the notice the assessee submitted a written statement in which it was stated that there was no evidence on record to show that the assessee had concealed the particulars of its income or had deliberately furnished inaccurate particulars of the same and as such, the notice was not warranted, that the ITO had estimated the business income at Rs. 20,000 as against Rs. 9,000 disclosed by the assessee which on appeal had been reduced to Rs. 11,000 and on that account no question of penalty arose. As regards the purchase of two shops it was urged that they had been separately purchased by the karta's sons, Brij Mohan and Banwari Lal, for Rs. 9,000 each. Their names had been recorded in the municipal records and they were realizing rent from the tenants. As for the source of consideration it was stated that Banwari Lal had borrowed Rs. 3,000 from his maternal uncle, Babu Lal, and the remaining amount came from his past savings. Similarly, Brij Mohan had taken a loan of Rs. 3,000 from his father-in-law, Laxman Das, and another sum of Rs. 3,000 from his maternal uncle, Babu Lal, and the remaining amount came out of his past savings. It was stated that all these persons had been examined before the ITO and they had filed their confirmation letters. As for the cost of constniction of four flats it was stated that mostly old materials were used and further the mortar used was of cheap material and, therefore, the cost was much less.