SHYAMA CHARAN SAXENA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) "Shanti Villa", a house, was purchased in 1961 for a sum of Rs. 40,000 by Navin Chandra, Prabhat Chandra and Subhash Chandra, the three minor grandsons of the assessee, who was a leading civil lawyer of Hardoi having professional and property income, under the guardianship of their mother. In 1970, the ITO reopened proceedings for the assessment years 1962-63 to 1969-70, being of opinion that the assessee had failed to disclose the income from this property and to explain the investments made therein, in his returns. The explanation of the assessee supported by his own affidavit that the money was given to his grandsons by their grandmother who had owned property and had income therefrom was not accepted. The ITO held that the house was purchased by the assessee out of his past savings, the sale of agricultural land and National. Savings Certificates.

(2.) IN consequence of this finding, notices under Section 271(1)(c) were also issued. But as the assessee had died, proceedings were initiated and continued against his son. The explanation that the default, if any, was not wilful or deliberate was rejected. IN appeal, both the orders, of reassessment and penalty, were maintained. The Tribunal also did not find any merit in any of the appeals. It, however, allowed the application under Section 256(1), filed against the appellate orders in the penalty matters and referred the following questions of law in ITR No. 981 of 1976.

(3.) IN ITR No. 602 of 1977 the following question of law was referred :