ARYA CONFECTIONARY WORKS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) By a reference, Misc. Civil Case No. 74 of 1979, under s. 256(1) of the IT Act, 1961 (hereinafter referred to as ;the Act;), the Income Tax Appellate Tribunal, Indore Bench referred the following two question of law to this Court for its opinion :

(2.) Now the facts that the ITO, who made the reference, was competent to make the reference and the IAC, who received the reference, was competent to receive the same, have not been disputed. It is also not disputed that the Rules do not prescribe any form, in which a reference is required to be made under s. 274(2) of the Act. Annexure B is the report made by the ITO to the IAC on 2-4-1975 and the heading of that report discloses that it is a case recommended for penalty under s. 271(1)(c) of the Act for concealment of income by the assessee. In that report, detailed factual information for initiating proceedings for imposition of penalty has been furnished. The ld. counsel for the assessee, however, contended that the ITO was obliged under s. 274(2) of the Act to send the entire record of the case to the IAC to enable him to decide the matter relating to imposition of penalty. There cannot be any dispute that the IAC should have before him the relevant record before he proceeds to pass an order imposing penalty, but the date of sending the record or any further information to the IAC will not be decisive of the question as to the date when the reference was made. That will depend upon the date when the ITO, who has jurisdiction, had moved the IAC having jurisdiction, to initiate proceedings against an assessee for imposition of penalty under s. 274(2) of the Act. In the instant case, the ITO had referred the matter to the IAC on 22-4-1975. In the circumstances it cannot be held that there was no valid reference made by the ITO to the IAC prior to 1-4-1976. In this view of the matter, the Tribunal in our opinion, was justified in law in holding that the IAC had jurisdiction to levy the penalty.

(3.) As regards the second question referred to this Court, the Tribunal has found that the business carried on in the name of M/s. Gopal Agencies was a benami business of the assessee. The relevant finding of the Tribunal, as recorded in the order forming part of the record of Misc. Civil Case No. 74 of 1979, is as follows :