COMMISSIONER OF INCOME TAX Vs. SURINDER SINGH

JUDGEMENT

(1.) ON a mandamus issued by this court in ITC No. 109 of 1976 by the judgment dated August 22, 1977, the Income-tax Appellate Tribunal, Amritsar, has referred the following question for the opinion of this court :

(2.) SURINDER Singh (hereinafter called " the assessee "), held a British passport. On March 17, 1971, the Enforcement Directorate searched his residential house at 14-B Model Town, Jullundur, under the provisions of the Foreign Exchange Regulation Act, 1947, and recovered a suit case containing Indian currency notes of Rs. 6,00,000 from his bedroom. When the Income-tax Officer came to know of the search and recovery of the amount, he initiated assessment proceedings for the assessment year 1971-72 and served a notice under Section 139(2) of the Income-tax Act, 1961 (for short " the Act "), on the assessee on April 2, 1971. On June 21, 1971, the assessee filed a return declaring an income of Rs. 3,850 with certain remarks in Part IV of the return. In the remarks, he stated as follows :

(3.) IN the penalty proceedings, the INspecting Assistant Commissioner of INcome-tax imposed a maximum penalty of Rs. 1,76,000 under Section 271(1)(c) of the Act. The INspecting Assistant Commissioner had made further enquiries in the penalty proceedings and came to the conclusion that the evidence in respect of these loans was cooked up. Against the aforesaid order, the assessee took the matter in appeal before the Tribunal and the Tribunal cancelled the penalty for the reasons which are contained in paras 11 to 13 of its order. The Department sought a reference to this court, which was initially declined by the Tribunal on the ground that no question of law was involved and the matter was decided on facts but on application filed in this court under Section 256(2), mandamus was issued and that is how the question of law has been referred to this court.