COMMISSIONER OF INCOME TAX Vs. FAIZUDDIN

JUDGEMENT

(1.) AT the instance of the Commissioner of Income-tax, U. P., Lucknow, the Income-tax Appellate Tribunal, Delhi Bench "A", has submitted the following question of law, under Section 256(1) of the Income-tax Act, 1961, for the opinion of this court :

(2.) THE assessee is an individual and derives income from various sources, including the running of motor workshop, contract business, truck plying on hire and truck financing. For the assessment year 1966-67, the assessee filed a return showing an income of Rs 7,587. Later on, he filed a revised return showing an income of Rs. 22,630. THE Income-tax Officer, however, determined the income at Rs. 45,758. In the assessment was included a sum of Rs. 16,000 being an unexplained cash credit. THE Income-tax Officer also initiated proceeding for levy of penalty under Section 271(1)(c) of the Income-tax Act, 1961. As the minimum penalty imposable was more than Rs. 1,000, the Income-tax Officer transferred the proceedings to the Inspecting Assistant Commissioner of Income-tax. THE Inspecting Assistant Commissioner levied a penalty of Rs. 12,000. In the meantime, the assessee's appeal against the assessment was partly allowed. In the appeal against the penalty the Tribunal held that mere addition of an item of cash credit in the assessee's income does not itself justify the imposition of penalty on the ground of concealment of income and, as such, the penalty order was set aside. THE Commissioner is aggrieved and at his instance the Tribunal referred the question of law mentioned above for the opinion of this court.

(3.) THE case of the Kerala High Court in Commissioner of Income-tax v. Gates Foam and Rubber Co. [1973] 91 ITR 467 (Ker) has no application to the facts of the present case. THEre it was found as a fact that the assessee had set up a bogus firm the income of which was included in the assessee's total income. THE High Court found that this is was a fraud committed by the assessee and, therefore, the case was covered by the Explanation to Section 271(1)(c). It is clear that the question of applicability of the Explanation was raised and considered by the Tribunal and, as such, the question did arise out of the order of the Tribunal and the High Court considered its applicability. Such is not the case here.