SHANTI SWARUP BHATNAGAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The Tribunal, Allahabad, has referred the following questions of law under Section 256(2) of the IT Act, 1961 (hereinafter referred to as "the Act") for opinion to this Court :

(2.) Briefly stated, the facts giving rise to the present reference are as follows : The reference relates to the asst. yr. 1975-76 in respect of proceeding for imposition of penalty under Section 271(1)(c) of the Act. The applicant is an individual who did not maintain any account. The original assessment for the year under reference was framed by the ITO on 20th Sept., 1975 on a total income of Rs. 12,000. A search took place on 28th Nov., 1976 at the residence of the applicant's father Sri S.B. Bhatnagar in which a black diary which was in the handwriting of the applicant, was seized. Amongst other entries, an entry relating to Rs. 10,000 in respect of some transaction with one Lalloo was found. The ITO reopened the assessment under Section 147 of the Act and made an addition of Rs. 10,000. It may be mentioned here that pursuant to the notice issued under Section 148 of the Act, the applicant himself had surrendered a sum of Rs. 10,000 standing in the name of Lalloo in the black diary on the ground that he was not in a position to produce the said person. Proceedings for initiation of penalty under Section 271(1)(c) of the Act was initiated and the ITO imposed a sum of Rs. 10,000 as penalty. The order was set aside by the AAC. However, the Tribunal, in appeal preferred by the Revenue, has restored the penalty order.

(3.) We have heard Sri Vikram Gulati, learned counsel for the applicant, and Sri A.N. Mahajan, learned standing counsel appearing for the Revenue.