COMMISSIONER OF INCOME TAX Vs. SHAH P M

JUDGEMENT

(1.) THIS reference application relates to the assessment year 1967 -68. In the course of the assessment proceedings for this assessment year, the Income -tax Officer recorded his satisfaction that the assessee had concealed his income. The particulars of such concealed income were held by the Income -tax Officer to be as follows :

(2.) THE Inspecting Assistant Commissioner also gave to the assessee a notice dated March 17, 1972, under section 274(2) read with section 271 of the Income -tax Act, 1961. This notice also stated as follows : 'Whereas the Income -tax Officer, Section XVI (Cent.) Bombay, has, under sub -section (2) of section 274 of the Income -tax Act, 1961, referred your case to me in connection with the penalty proceedings under clause (c) of sub -section (1) of section 271 and whereas it appears to me that you have concealed the particulars of your income or deliberately furnished inaccurate particulars of such income for the assessment year 1967 -68. ...'

(3.) THE assessee appealed to the Tribunal against the penalty order of the Inspecting Assistant Commissioner. The Tribunal held that the levy of penalty in respect of the income of the wife was not justified. In the respect of the loan of Rs. 50,000 from Messrs. Madhusadan Gordhandas to the assessee, the Tribunal observed that the credit of Rs. 50,000 was not the exclusive credit in the account of Messrs. Madhusadan Gordhandas. There were credits for larger amounts in the earlier two assessment years. Interest of Rs. 33,000 was paid in respect of these larger credits. The earlier credits were accepted by the Department as genuine. Merely because as raid was conducted on the premises of Messrs. Madhusadan Gordhandas and certain loose sheets were seized in which an entry for a cash receipt was noted in the account of the assessee, it could not be said that the credit of Rs. 50,000 appearing in the books of the assessee was not genuine. The Tribunal said that the assessee had discharged the burden by producing a confirmatory letter in respect of this loan from Messrs. Madhusadan Gordhandas. There was not material on record for imposing penalty. Its also came to a similar conclusion with regard to the interest amount as also jewellery of the value of Rs. 1,20,000. In connection with the jewellery, the assessee had contended that the jewellery was owned by the assessee's friend and his wife and had been borrowed by the assessee and his wife to celebrate the festival of 'Paryushan'. The Tribunal said that the Department had not established, with the help of any positive evidence, that there was any concealment of income in this connection by the assessee. The Tribunal therefore negatived the contention that the main provision of section 271(1)(c) was attracted.