COMMISSIONER OF INCOME TAX Vs. RADHA KISHAN GOEL

JUDGEMENT

(1.) Tribunal has referred the following question under Section 256(1) of the Income Tax Act, 1961, (hereinafter referred to as "the Act") for opinion of this Court relating to the assessment year 1989-90:

(2.) The brief facts of the case are follows:

(3.) A search was conducted at the residential as well as business premises of the assess Opposite party (hereinafter referred to as "Assessee") on 30.08.1988, during the course of which cash, jewellery and other valuable articles and things were found and seized. It appears that during the course of the assessment proceedings to settle the dispute on agreed basis assessee moved an application before CIT on which direction was issued by Commissioner of Income-tax, Kanpur, in which it was remarked that penalty proceedings under Section 271(1)(c) of the Act may not be applicable where additional income is covered by Explanation 5 of Section 271(1)(c) of the Act as the said income stood surrendered in the statement under Section 132(4) of the Act for which returns were due to be filed within the statutory period. Assessment was completed on an income of Rs. 24,43,980/-, which included unexplained cash of Rs. 1,65,000/- and unexplained jewellery of Rs. 22,63,557/-. The unexplained income as stated above was taken in assessment in accordance with the directions issued by Commissioner of Income Tax. Thereafter, the assessing authority examined the mater and concluded that the provisions of Explanations 5 to Section 271(1)(c) of the Act were not applicable to the present case as all the ingredients of Explanation 5(2) were not fulfilled and consequently a penalty of Rs. 12,63,100/- was imposed. The said penalty order was also confirmed by the Commissioner of Income Tax (Appeals) in an appeal filed by the assessee. Assessee filed the second appeal before the Tribunal. Tribunal allowed the appeal and deleted the penalty. Tribunal held that the provisions of Explanation 5 (2) of Section 271(1)(c) of the Act were full attracted on the facts and circumstances of the case.