CIT Vs. MANMOHAN GOEL

JUDGEMENT

(1.) THE Income Tax Appellate Tribunal, New Delhi has referred to following question of law under section 256(2) of the Income Tax Act, 1961 ('the Act') for opinion of this Court: 'Whether in the facts and in the circumstances of the case the ITAT was justified in holding that conditions laid down in Explanation 5(2) to section 271(1)(c) were fulfilled and no penalty was leviable under section 271(1)(c)?'

(2.) THE present reference relates to the assessment year 1989 -90. Brief facts of the case are that a search was conducted at the residential as well as business premises of the assessee -respondent ('assessee') on 30 -8 -1988 and during the course of which cash, jewellery and other valuable articles and things were found and seized. The assessment was completed on an income of Rs. 17,68,000, which included unexplained cash of Rs. 1,30,000, unexplained jewellery of Rs. 15,67,981, unexplained investment in pawned articles of Rs. 60,900, unexplained investment to advance debtors amounting to Rs. 4,169. During the search and seizure proceedings, the assessee had declared his income and had also moved application for settlement before the learned CIR, Kanpur. Consequently, on the settlement arrived at, the assessment was framed on the disclosed income of the assessee. As regards the penalty proceedings, the learned CIT had issued directions that penalty proceedings under section 271(1)(c) may not be applicable in case where additional income is covered by Explanation 5 to section 271(1)(c). Thereafter the assessing officer, after scrutinising the facts of the case, came to the conclusion that the facts of the case were not covered by Explanation 5 to section 271(1)(c) and thus, penalty provisions were attracted. Consequently, penalty was imposed.

(3.) HEARD learned standing counsel appearing on behalf of revenue and Sri Shakeel Ahmad, learned counsel for the assessee -respondent.