LALTA PRASAD GOENKA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under s. 256(1) of the I.T. Act, 1961 (referred to hereinafter as 'the said Act'). The question referred to us for our determination under the reference is as follows :

(2.) THE assessee earned in the previous year, relevant to the assessment year 1961 -62, interest of Rs. 4,757 from the money deposited with one Gwalior Investment Co. Pvt. Ltd. In the return for the said assessment year, which was field on March 17, 1962, this income was not disclosed and even in the revised return field on November 2, 1965, it was not disclosed. The assessee merely disclosed the amount deposited by him with the aforesaid company in his wealth -tax return for the assessment year 1961 -62. As far as income -tax proceedings were concerned, it was only in the course of the assessment proceedings before the ITO that the representative of the assessee requested that the aforesaid interest of Rs. 4,757 from the said company may be included in the return. In finalising the assessment, the ITO added a sum of Rs. 14,000 as the undisclosed income of the assessee, and in that sum the amount of interest of Rs. 4,757, earned as aforesaid, was included. Regarding the aforesaid item of interest the ITO in the assessment order observed that the fact remained that the assessee did not disclose this income in this return or revised return and became liable to the consequences provided in s. 271(1)(c) of the said Act. The ITO referred the penalty proceedings to the IAC (Inspecting Assistant Commissioner) (Central), Bombay. This assessment order was passed on March 28, 1966. On the same day the ITO issued a notice informing the assessee that since the penalty proposed to be levied exceeded Rs. 1,000, the case was referred to the IAC, The IAC by his noticed dated December 20, 1967, called upon the assessee to show cause why penalty should not be levied under s. 271(1)(c) of the said Act read with s. 274(2) of the Act. The IAC rejected the contention of the assessee as to why penalty should not be levied. He held that in the return field by the assessee on March 17, 1962, there was no indication regarding the aforesaid interest received from Gwalior received from Gwalior Investment Co. Pvt. Ltd., and even in the revised return there was nomination of the same, although at the hearing a note was made by the ITO that the representative of the assessee requested that the said item of interest might be included in the income. He held that this was a clear omission, but in view of the fact that the assessee had disclosed that item at the stage of hearing, the penalty should be confined to the minimum provided under the said Act. The assessee preferred an appeal to the Income -tax Appellate Tribunal against this decision of the IAC. It was contended on behalf of the assessee before the Tribunal that the IAC had no jurisdiction to levy the penalty and that the quantum of the penalty was excessive. The Tribunal rejected both these contentions. The Tribunal went on to consider as to whether there has been any concealment in the present case within the meaning of s. 271(1)(c) of the said Act. The Tribunal held that it was not possible to accept the contention of the assessee that he omission by him to disclose this item of interest in his return as well as revised return was merely an accidental slip or that the omission was by inadvertence. The Tribunal, however, looking to all the facts and circumstances, directed the ITO to recompute the penalty and to impose the minimum penalty permissible under the law. It is from this decision of the Tribunal that the aforesaid question has been referred to us for our determination.

(3.) SUB -section (2) of s. 274 of the said Act, which has now been deleted, but which was in force at the relevant time, read thus :