SULEMANJI GANIBHAI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the I.T. Act, 1961, referring for our answer the following question of law :

(2.) THE assessee is a registered partnership firm deriving income from agency business in cement and truck business. THE truck business was a new business in the year of account. THE relevant assessment year is 1966-67. THE assessee filed a return on 4th July, 1966. In this return, the assessee did not disclose any income from truck business. THE assessee filed a revised return on 20th February, 1969, in which an income of Rs. 2,840 was shown to accrue from a truck referred to as Mohd. Hussain Truck. THE examination of the assessee's account books by the ITO revealed that in addition to Mohd. Hussain Truck account, the income from this truck was entered in another account in the name of Karam Singh. It was further found that the assessee had another truck referred to as the Leyland truck and that the assessee had made considerable profits from this truck also during the relevant account year. THE ITO added three items totalling Rs. 29,039 as income from truck business in place of Rs. 2,840 returned by the assessee in the revised return. Penalty proceedings were also started against the assessee. THE IAC held that the assessee had concealed the particulars of its income and had furnished inaccurate particulars and was liable to penalty under Section 271(1)(c) of the Act. On this finding penalty of Rs. 27,000 was imposed on the assessee by the IAC. In appeal, the Tribunal agreed with the findings of the Commissioner that the mistake committed by the assessee in not disclosing the truck income was not an honest mistake and that the non-disclosure was wilful. THE Tribunal also examined the question as to whether the law as amended from 1st April, 1968, was applicable regarding the quantum of penalty and it came to the conclusion that the amended law was applicable for the reason that the revised return was filed after the law was amended. THE Tribunal reduced the penalty from Rs. 27,000 to Rs. 26,203. THE Tribunal, it appears, did not levy any penalty in respect of the income of Rs. 2,840 which was disclosed in the revised return.

(3.) BY Section 19 of the Finance Act, 1968, which came into force on 1st April, 1968, for Clause (iii) in Section 271(1), the following clause was substituted :