RAGHBIR SINGH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a petition under Articles 226 and 227 of the Constitution of India by an income-tax assessee who is aggrieved against the orders of the income-tax authorities, whereby penalty was levied on him. Instead of bringing the matter under Section 256 of the I.T. Act, 1961 (hereinafter referred to as the Act), by way of reference to this court, he has taken recourse to challenge the orders in writ jurisdiction without any explanation why such course was adopted and the alternate remedy not availed of. On this short ground, the petitioner could have been non-suited. But, since the petition in 1977 was admitted ex parte, it would not be proper now to dismiss it on that score despite the objection of the respondents.

(2.) THE facts giving rise to this petition are simple and straight. THE petitioner was a businessman at Ludhiana under the name and style of "Messrs. Raghbir Singh Vinod Kumar, Ghas Mandi, Ludhiana". For the assessment year 1971-72, he filed his income-tax return. THE ITO made additions to the tune of Rs. 37,465. THE said sum included a sum Rs. 10,000 which the petitioner was found to have loaned to M/s. Vasu-dhara Textile Mills, Ludhiana, but without having disclosed the source of that sum of money. THE petitioner appealed against the order of the ITO. THE AAC, vide order dated August 24, 1974, deleted the addition except the amount of Rs. 10,000 which related to M/s. Vasudhara Textile Mills, Ludhiana. THE quantum case thus rested at that stage. THE law, as it then stood, required the ITO to report the matter, for purposes of imposition of penalty, to the IAC, in case the penalty was leviable under Section 271(1)(c) of the Act and related to concealed income (as determined by the ITO on assessment) exceeding a sum of Rs. 25,000. As is plain, the ITO had made an addition of Rs. 37,465 and thus his action fell squarely within Section 274(2) of the Act, as it then stood. THE IAC then initiated proceedings and imposed a penalty of Rs. 10,000 under Section 271(1)(c)of the Act by his order dated March 19, 1976, annex. P-2.

(3.) THE third and the last point raised is that the Appellate Tribunal decided the appeal without looking to the affidavit filed by the petitioner. THE ITO has tried to explain away in his return that even as per that affidavit if M/s. Vasudhara Textile Mills had made some voluntary disclosure, that did not make any difference with regard to the liability of the petitioner to the concealment admittedly made by the petitioner. It is maintained by the petitioner's learned counsel that the contents of the affidavit had to be verified by the Appellate Tribunal by checking from M/s. Vasudhara Textile Mills as to whether such disclosure was made or not. THE argument again, as it seems to me, loses sight of the fact that the petitioner had himself owned that the transaction of Rs. 10,000, which he entered into with M/s. Vasudhara Textile Mills, was genuine and of money lending. THE morn fact that M/s. Vasudhara Textile Mills, by a voluntary disclosure described such transaction as benami, so far as it related to the petitioner, was of no avail to the petitioner. No order of any income-tax authority, passed thereon was pressed into service to show any conflicting decision. THE voluntary disclosure of M/s. Vasndhara Textile Mills could not, in the circumstances, be treated as the gospel truth. In any case, it was a pure question of inference to be drawn from the circumstances which, was within the domain of the authorities. No fault in that regard can be found with the view taken by the Appellate Tribunal. Mr. Nehra was emphatic that the affidavit had to be looked into and then alone the Tribunal could come to a conclusion. However, he has not been able to elaborate as to what precisely is his view about "looking into the affidavit". It does not mean that any elaborate enquiry was required to be made into the affidavit or its contents, a matter purely discretionary with the Appellate Tribunal.