COMMISSIONER OF INCOME TAX Vs. G L TEXTILES

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Allahabad Bench, Allahabad, has under Section 256(2) of the Income-tax Act, 1961, referred the following question for our opinion :

(2.) THE facts necessary for the decision of this reference may be shortly stated. THE assessee is a registered firm and carried on the business of manufacturing of tents, etc. For the year 1964-65, it filed a return showing an income of Rs. 43,395. THE Income-tax Officer assessed the income at Rs. 81,786 by making certain additions including an amount of Rs. 15,000 standing in the name of Smt. Parvati Devi and two other cash credits of Rs. 5,000 each standing in the name of Smt. Shrimati Devi and Smt. Vijaya Laxmi Devi. On appeal before the Appellate Assistant Commissioner, these additions were upheld, but the total income was reduced from Rs. 81,786 to Rs. 71,786. On further appeal before the Tribunal, these additions were again upheld. THEreafter, proceedings for imposition of penalty were started under Section 271(1)(c) of the Act. As the minimum penalty imposable was over Rs, 1,000 the Income-tax Officer referred the matter to the Inspecting Assistant Commissioner, THE Inspecting Assistant Commissioner issued a show-cause notice to the assessee in response to which it was stated on behalf of the assessee, that the amounts of cash credits were treated as the assessee's income merely for want of satisfactory evidence, and there was no evidence on the record to show that these cash credits were really concealed income of the assessee. It was also urged that the creditors admitted having made the deposits and, as such, the penalty provisions of Section 271 were riot attracted. THEse contentions did not find favour with the Inspecting Assistant Commissioner, and a penalty of Rs. 3,900 was thereupon imposed by him. THE assessee preferred an appeal to the Tribunal. THE Tribunal pointed out that as respects the addition of Rs. 15,000 standing in the name of Smt. Parvati Devi, the department had accepted as genuine the deposit amount of Rs. 10,000, and the balance amount of Rs. 5,000 was added to the assessee's income for want of satisfactory evidence. Similar was the position with respect to the other cash credits. In view of this, the Tribunal held that the provisions of Section 271(1)(c) of the Act were not attracted. THE penalty imposed by the Inspecting Assistant Commissioner was accordingly set aside.