BHAGIRATH PRASAD BILGAIYA Vs. COMMISSIONER OF INCOMETAX

JUDGEMENT

(1.) THE following question of law has been referred for four opinion at the instance of the assessee:

(2.) THE assessee derived income from money -lending, house property and brokerage on sale and purchase of land. For the asst. year 1960 - 61, the assessee filed a return on July 23, 1964, showing income from money -lending at Rs. 215 and from house property at Rs. 260. The assessee did not maintain books of account in the form of cash book and ledger. The ITO on the basis of the previous record estimated the capital invested in money -lending at Rs. 78,000 and on that basis came to a conclusion that the income from interest would be Rs. 9,600. During the same year, the assessee had constructed a house, the cost of which was shown by the asses - see to be Rs. 7,000. This was not accepted and the ITO estimated the cost at Rs. 10,000. The sum of Rs. 3,000 was treated as income from undisclosed sources. For the same year, the assessee had shown sales of land of the value of Rs. 29,305. Out of this amount, the assessee had satisfactorily explained and accounted for Rs. 12,015 but for the rest his explanation was not accepted. The ITO found that the assessee could not explain how the rest of the "amount was arrived at" nor offered any explanation as to the "source of the amount". The ITO initiated penalty proceedings. As the minimum penalty imposable exceeded Rs. 1,000, he referred the matter to the IAC, who, after taking into consideration the explanation given by the assessee, imposed a penalty of Rs.5,000.

(3.) THE assessee filed an appeal before the Tribunal. The Tribunal was of the opinion that in respect of the income from interest and the estimate of cost of house and the sale of land, the ITO has estimated the income as the assessee's explanation was not satisfactory. The assessee has concealed his income and the penalty proceedings were rightly attracted. The question that arises for our consideration is wheather the penalty proceedings were justified.