LAXMIBAI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE questions of law referred in this case by the Income-tax Appellate Tribunal are as follows :

(2.) THE reference arises out of penalty proceedings for the assessment year 1972-73. Ganesh Das Narang who was the assessee died on 16th May, 1974. He was being assessed in his individual capacity. He was also a partner in a firm carrying on business in the name of M/s. Ram Prakash Ganeshdas. THE assessee transferred a truck belonging to him to the partnership. THE sale price obtained by the assessee from the firm was Rs. 6,835 more than the written down value. In the assessment proceedings, the ITO added this amount as assessable income under Section 41(2) of the I.T. Act, 1961. THE assessment order became final after it was upheld in appeal by the AAC. THE ITO initiated penalty proceedings for concealment of income of Rs. 6,835 under Section 271(1)(c) of the Act. In these proceedings, the assessee submitted that the transaction by which the truck was transferred to the firm did not amount to a sale and Section 41(2) was not attracted. It was also submitted that at any rate it was A debatable question and if the assessee honestly believing that the amount of Rs. 6,835 was not taxable as income did not disclose it in the return, he could not be held liable for concealment of income under Section 271(1)(c). It was further submitted that the assessee having died on 16th May, 1974, penalty proceedings could not be continued.