COMMISSIONER OF INCOME TAX Vs. AGARWAL S K

JUDGEMENT

(1.) AS the Revenue was aggrieved by the order of the Tribunal cancelling the penalty imposed under s. 271(1)(c) IT Act, 1961 (the Act) as well as rejection of the application made by it under s. 256(1) of the Act, the Revenue filed an application under s. 256(2) of the Act before this Court. Vide their judgment/order dt. 15th Dec., 1976, in IT Ref. No. 116 of 1976, this Court directed the Tribunal to draw a Statement of the Case and refer the following question for its opinion :

(2.) THE assessee is an individual and is a partner in two firms M/s Agarwal Fabrications and M/s K.C. Agarwal & Sons. THE assessment year is 1968-69 and the relevant previous year is the calendar year 1967.

(3.) AS the total income of the assessee exceeded Rs. 25,000 the ITO referred the matter to the IAC. Thereafter, the IAC issued a notice on the assessee under s. 271(1)(c) of the Act calling upon the assessee to show cause why penalty should not be imposed in respect of the addition of Rs. 26,050 made in the assessment proceedings. The assessee resisted the action of the IAC vide his letter dt. 27th Feb., 1974 of his Chartered Accountants M/s Khandelwal Jain & Co. Overruling the objections raised by the assessee and keeping in view the fact that there was an amendment in s. 271(1)(c) of the Act w.e.f. 1st April, 1964, the IAC imposed penalty of Rs. 26,050 vide his order dt. 5th March, 1974.