COMMISSIONER OF INCOME-TAX Vs. KUNDAN LAL

JUDGEMENT

(1.) IN this reference under Section 256 (1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), at the instance of the revenue, by the Income-tax Appellate Tribunal (Amritsar Bench), Amritsar, the following question of law has been referred:

(2.) FOR the assessment year 1964-65, the assessee, Shri Kundan Lal, proprietor of M/s. Janta Trading Company, Pathankot, declared a loss of Rs. 339. The ITO, however, completed the assessment on a total income of Rs. 53,690. The additions made to the total income of the assessee included the additions of Rs. 30,000 and Rs. 20,000 on account of unexplained cash credits in the names of M/s. Madhavji Finance Private Ltd. , Delhi, and M/s. Gopaldas Manohar Lal, Delhi, respectively. The addition of Rs. 50,000 was sustained by the Income-tax Appellate Tribunal, Chandigarh, in I. T. A. No. 140 of 1969-70.

(3.) SINCE the total income of the assessee as determined by the department, exceeded the maximum amount not liable to tax by over Rs. 2,500 and since the assessee had not filed the estimate of advance tax in accordance with the provisions of Section 212 (3) of the Act, the ITO initiated penalty proceedings and, in due course, levied a penalty of Rs. 6,000 on the assessee under Section 273 (b) of the Act. On appeal, the AAC upheld the legality of the penalty order but reduced the amount of penalty to the minimum imposable under the law. On second appeal, the Income-tax Appellate Tribunal, Chandigarh, deleted the penalty. The Tribunal took the view that " we are of the view that for filing of an estimate of income under Section 212 (3), the income which should form the subject-matter of an estimate should be of an undisputed nature When the nature of the income is disputed by the assessee, the assessee is not under an obligation to file an estimate within the meaning of Section 212 (3) ".