KALURAM GANESHRAM HUF Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Nagpur Bench, Nagpur, has referred the following question to this Court for its opinion, under S. 256 of the INCOME TAX ACT, 1961 (hereinafter referred to as " the Act ").

(2.) THE facts in a nutshell which are necessary for answering the aforesaid question are that during the asst. year 1969 -70, it was discovered that the assessee had concealed the particulars of capital gains received by it in the sum of Rs. 9,000, consequent upon the sale of certain immovable properties. On its basis, proceedings for imposition of penalty under S. 27l(1)(c) of the Act were initiated against the assessee. Clause (iii) of S. 271(1) of the Act as it stood at the relevant time contemplated imposition of penalty " in the cases referred to in cl. (c), in addition to any tax payable by him a sum which shall not be less than but which shall not exceed twice the amount of the income in respect of which the particulars have been concealed or inaccurate particulars have been furnished ". After having found in the penalty proceedings that a case for imposition of penalty under S. 271(i)(c) of the Act has been made out, the ITO imposed penalty in the sum of Rs. 9,000 which according to him was the minimum amount of penalty imposable inasmuch as the income by way of capital gains concealed was of the same amount. The view taken by the ITO was reversed by the AAC in the appeal filed by the assessee. Against this order, the Department preferred a second appeal before the Tribunal which was allowed and the order of the assessing authority was restored. An application was thereafter made by the assessee before the Tribunal for referring the aforesaid question to this Court for its opinion under S. 256(1) of the Act. The said application having been dismissed, the application was made by the assessee in this Court under s. 256(2) of the Act which was allowed and the Tribunal was directed to refer the aforesaid question after drawing up a statement of the case. It is in pursuance of that order that the aforesaid question has been referred to this Court for its opinion.

(3.) HAVING heard learned counsel for the parties, we find it difficult to agree with the submission made by learned counsel for the Department. When S. 2(24) defines the term " income ", it does not make any distinction between the gross income and the taxable income for purposes of taxation. However, there is no doubt that it is not the gross income, but it is the taxable income which constitutes the basis of determination of the amount of tax payable. Sec. 28 of the Indian IT Act, 1922, which was the corresponding section of S. 271 of the Act came up for consideration before a Division Bench of the Lahore High Court in Nagin Chand Shiv Sahai vs. CIT (1938) 6 ITR 534 (Lah). It was held that the word " income " is not used in S. 28 of the Indian IT Act in the popular meaning of money received but is used in a much wider sense and connotes the assessable figure arrived at after accounting for all the legitimate deductions and exemptions. In our opinion, this view, to some extent, finds support from the legislative history of S. 271(1)(c) of the Act, r/w cl. (iii) referred to above. Clause (iii) as it originally stood read as hereunder :