COMMISSIONER OF INCOME TAX Vs. SAT PARKASH

JUDGEMENT

(1.) THE assessee is an individual. The assessment yearr concerned commenced on 1st April, 1968. Financial year is indicated by the ITO being the previous year, but regarding the share income of the assessee from the partnership firm, the previous year is the year ended 7th Sept., 1967. The ITO completed the assessment on 14th Oct., 1968. The assessee was a partner in the firm Behari Lal Pyare Lal with 1/2 share in the firm's profits. One of the additions made by the ITO to the declared income was of an amount of Rs. 2,249/-, which had been credited to the assessee's account in the said firm's books as being 50 per cent of Rs. 4,498/-, which was refunded to the said firm by the ST Department as having been paid in excess to the ST Department earlier. The Sales-tax which was paid, had been deducted from the Income-tax assessments for the asst. yrs. 1961-62 and 1962-63. The refund amount of Rs. 4,498/- was treated as the deemed profits of the said firm under S. 41(1) of the IT Act, (hereinafter referred to as the Act) and had been included in the assessed income of the said firm for the asst. yr. 1968-69.

(2.) PENALTY proceedings were initiated against the assessee on the ground that he had concealed income to the extent of Rs. 2,249/- being his 50 per cent share of the aforesaid refund amount of Rs. 4,498/- and the impugned penalty was imposed. On appeal, the penalty was deleted by the Tribunal on 30th Jan., 1971, holding that the deemed income cannot be made the basis for levying penalty. This order of the Tribunal was set aside by this Court and on remand the Tribunal relying on a decision reported in CIT vs. Mahavir Cold Storage (1975) 100 ITR 686 (P&H) held that the identity of assessable entities, which were assessed for the asst. yr. 1961-62 and 1962-63 on the one hand and for asst. yr. 1968-69 on the other, was not the same, and, therefore, the penalty could not be levied.

(3.) AFTER hearing the learned counsel for the parties, was are of the opinion that the view of the Tribunal that the question whether the penalty is liveable in view of the change in the identity of the parties of the firm, is not a question of law, is not sustainable. The Tribunal held that the penalty was not liveable as the identity of the assessable entities, which were assessed for the asst. yr. 1961-62 and 1962-63 on the one hand and for the asst. yr. 1968-69 on the other, was not the same. It is a different matter as to what may be the answer to the question but it cannot be successfully contended, keeping in view the facts of this case, that the question which is being sought to be referred to this Court at the instance of the Revenue, is not a question of law. For the reasons recorded above, we allow this petition and direct the Tribunal to refer the said question of law for the opinion of this Court. The statement of the case may be sent within three month from today. There will be no order as to costs.