COMMISSIONER OF INCOME-TAX Vs. RATAN LAL AGRAWAL

JUDGEMENT

(1.) THE Tribunal (R.A. Nos. 111 to 120/All./1996) referred the following question of law under Section 256(1) of Income -tax Act, 1961 (hereinafter referred to as the Act') for the opinion of this Court: Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal was correct in law in allowing the appeal of the assessee holding that the additions made are intangible and it would be improper to impose any penalty on an addition of this nature ignoring the facts that there was very clear quantification of concealed income detected on the basis of entries recorded in the seized books of account of the assessee which clearly attracts the provisions of Explanation (1) to Section 271(1)(c) of the Income -tax Act, 1961

(2.) THE facts, briefly, are that there was a police raid conducted on the assessee's premises. During the course of search, certain books of account were seized. Later on, these books were taken over by the Income -tax Department. It stood revealed from these books that the assessee has been doing money lending and pawning business on a good scale in HUF status.

(3.) LATER on, the Assessing Officer levied the penalty under Section 271(1)(c) of the Act. The same was upheld by CIT (A) but was cancelled by the Tribunal after observing that the police search took place on 29 -7 -1975 which is relevant for the assessment year 1976 -77, the period of internal emergency in the country. The second search was conducted on 10 -8 -1983 which is relevant for the assessment year 1984 -85. Due to lapse of more than a decade, the cash creditors were not produced so additions were made by Assessing Officer. Finally the same was sustained by ITAT in quantum appeals. But there is no concealment on the part of the assessee. Not being satisfied, the department is before us on the reference applications.