COMMISSIONER OF INCOME TAX Vs. KHAN N

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Allahabad, has submitted the statement of the case under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as the "Act").

(2.) THE assessee is a firm registered under the Act. For the assessment year 1962-63 it did not file a return of its income as required by Section 139(1) of the Act. Under that provision the return should have been filed by 30th November, 1962, Later on, in May 12, 1964, the assessee did file a voluntary return disclosing a net loss of Rs. 9,214. THE Income-tax Officer did not accept the return and assessed the assessee at a total income of Rs. 64,922, which included a sum of Rs. 40,000 as income from undisclosed sources, being the aggregate amount of three cash credits, the source and nature of which the assessee was unable to prove and which it ultimately surrendered for assessment. THE Income-tax Officer also initiated proceedings for levying penalty in respect of the default committed by the assessee of the provisions of Section 139(1) and ultimately imposed a penalty of Rs. 13,702 under Section 271(l.)(a) of the Act. THE assessee's appeal to the Appellate Assistant Commissioner of Income-tax failed. On a second appeal, the Income-tax Appellate Tribunal held that the assessee is not liable to file a voluntary return under Section 139(1) of the Act. THE reasoning of the Tribunal is like this. Out of the total income of Rs. 64,922 assessed by the Income-tax Officer, a sum of Rs. 40,000 on account of the unexplained cash credits had to be excluded and the balance of Rs. 24,922 was less than Rs. 25,000 which is the minimum taxable limit in the case of a firm. As such, Section 139(1) did not cast any liability upon the assessee to file a voluntary return. On this finding, the Tribunal has cancelled the penalty. THE Commissioner is aggrieved and at his instance the following question of law has been referred to us :

(3.) IN the alternative the learned counsel for the department argued that even if the assessee's income was below Rs. 25,000 yet it was under an obligation to file a voluntary return, if it had some income. He says because the income assessed in the hands of a firm is ultimately to be included in the assessment of the partners, there is no amount which is not chargeable to income-tax in the case of a registered firm. No such question was raised before the Tribunal and, as such, it does not arise out of the order of the Tribunal. It is well settled that in a reference only those questions can be answered by the High Court as have been raised before the Tribunal and have been referred by it. It is, therefore, not necessary to deal with this contention of the learned counsel.