COMMISSIONER OF INCOME TAX Vs. GANPATRAI GAJANAND

JUDGEMENT

(1.) THE Tribunal, Cuttack Bench, has stated this case at the instance of the CIT and referred the following question for the opinion of the Court :

(2.) ASSESSEE is a firm deriving income from business in china clay and iron mines and the relevant year of assessment is 1965 66 corresponding to the accounting period ending on December 31, 1964. Assessee returned an income of Rs. 18,199 but the ITO determined the same at Rs. 1,61,389. This amount of total income included a sum of Rs. 69,900 which the assessee claimed were cash credits, but the ITO added it as the assessee's income under S. 68 of the IT Act.

(3.) ASSESSEE challenged the levy of penalty before the Tribunal and claimed that the AAC had deleted a sum of Rs. 50,000 out of the cash credits. It appeared that by the time the Tribunal came to deal with the penalty appeal, the second appeal relating to the quantum matter had already been finalised and the Tribunal had already upheld a sum of Rs. 19,900 out of the cash credits. Before the Tribunal in the appeal against penalty matter, it was claimed that the evidence on record clearly demonstrated the bona fides of the assessee and there was, therefore, no intention to commit any fraud and the burden should be on the Revenue to prove that the amount added in the assessment was the income of the assessee before the assessee could be penalised for concealment of income. The Tribunal took into account the Explanation to S. 271(1)(c) of the Act which was admittedly applicable even if the ultimate addition out of the cash credits was confined to Rs. 19,900 and came to hold :