LADHURAM LAXMINARAYAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following question of law has been referred by the Income-tax Appellate Tribunal, Gauhati Bench, under Section 256(1) of the Income-tax Act, 1961, hereinafter referred to as " the Act " :

(2.) THE statement of the case discloses the following facts :

(3.) THE Income-tax Officer initiated penalty proceedings under Section 271(1)(c) and referred the matter to the Inspecting Assistant Commissioner who found that the assessee had made a false claim for deduction. He, therefore, held that under the law any interest payable to a partner is to be included in the assessment of the firm and that the assessee in its accounts, knowing fully well that the interest should have been written back in its return, had not done so with a mala fide intention of reducing the taxable income. In view of this, he further held that the provisions of Section 27I(1)(c) were attracted, and he imposed a penalty of Rs. 15,000. Against the penalty order the assessee preferred an appeal before the Income-tax Appellate Tribunal. THE Tribunal found that the assessee furnished inaccurate particulars of its income and it was within its knowledge that the particulars furnished were not correct. THE Tribunal pointed out that it was not possible to accept that the partners and the firm were separate entities in so far as the consciousness about the real state of affairs was concerned, and that the partners knew that the claim for interest was not genuine, and that they also knew that" these amounts belonged to the partners themselves. In that view, the Tribunal upheld the levy of penalty and dismissed the assessee's appeal.