SETHI PEN STORES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) In this reference under Section 256(2) of the Income-tax Act, 1961, the following questions have come up for determination :

(2.) Whether the Tribunal was right in holding that the Explanation to Section 271(1)(c) of the Income tax Act, 1961, applied in this case and that the assessee failed to discharge the onus that lay upon it under the said Explanation ?"

(3.) Before the Income-tax Officer, the assessee claimed that an amount of Rs. 1,13,471 was introduced and credited in the accounts of the partners as per the above settlement. The Income-tax Officer was, however, not satisfied with the explanation given by the assessee, He hold that only a sum of Rs. 57,500 which was greater than Rs. 56,962 representing the total tax cum-penalty liabilities arising on settlement under Section 271(4A) could be introduced in the books of account. He allowed the benefit of the above amount and added the balance of Rs. 57,500 as the income of the assessee from undisclosed sources.