ADDL COMMISSIONER OF INCOME TAX Vs. MADHAV DASS

JUDGEMENT

(1.) THE question of law referred for our opinion is whether there was any material to support the finding that the assessee was not guilty of wilful default or gross negligence within the meaning of Explanation to S. 271 (1)(c) of the IT Act, 1961 the question relates to the asst. yr. 1964-65. Till the asst. yr. 1963-64, the assessee was a partner in the firm Messrs. Madhav Dass & Sons. The firm was dissolved. Then the assessee started the same as his proprietary business. For the asst. yr. 1964-65, the assessee filed a return of income of Rs. 17,854. The ITO, inter alia, found that the revised balance sheet filed by the assessee showed an excess of assets over liabilities by Rs. 20,475 He included it as income from undisclosed sources. He ultimately assessed the income at Rs. 51,662. Finding that the returned income fell short of the assessed income by more then 80 per cent he initiated penalty proceedings. Since the impossible penalty was over Rs. 1,000 he referred the case to the IAC.

(2.) MEANWHILE , the assessee's appeal succeeded substantially. The assessed income was reduced to Rs. 23,292 which was later on rectified by the AAC to Rs. 32,500.

(3.) THE assessee went up in appeal to the Tribunal against the penalty order as well as the assessment on the quantum side. The ITO also filed an appeal against the AAC's order on the quantum side. There were thus three appeals before the Tribunal which were disposed of by a common judgment. The Tribunal held that the excess of the assets over liabilities was Rs. 20,475. The contrary view of the AAC was set aside. The appeal of the ITO was allowed and that of the assessee was dismissed.