LAKSHMI NARAIN SHAMBHURAM Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) FOR the assessment year 1947-48 the Income-tax Officer added a sum of Rs. 63,000 to the net profits shown by the assessee, Lakshmi Narain Shambhuram of Dhanbad. It appears that on the 26th September, 1946, the assessee obtained an overdraft of Rs. 60,000 from the Bharat Bank Limited, Jharia branch. The overdraft was obtained on the security of three fixed deposits in the Bharat Bank Limited in the following names : <FRM>JUDGEMENT_350_ITR49_1963Html1.htm</FRM>

(2.) THE Income-tax Officer was not satisfied with the explanation of the assessee, and after examining the three alleged depositors the Income-tax Officer came to the conclusion that the amount of money in fixed deposit to the extent of Rs. 63,000 really belonged to the assessee and represented his income from some undisclosed source. THE Income-tax Officer accordingly added this amount to the taxable income of the assessee. He also issued a notice under section 28(3) of the Indian Income-tax Act and ultimately imposed a penalty of Rs. 15,000 on the ground that the assessee had concealed the particulars of his income. THE assessee took the matte in appeal before the Appellate Assistant Commissioner who dismissed the appeal confirmed the order of penalty and also the assessment made under section 23(3) of the Indian Income-tax Act. THE assessee preferred appeals before the Income-tax Appellate Tribunal against the order of the Appellate Assistant Commissioner, but these appeals were also dismissed.

(3.) WE are accordingly of opinion that in the facts and circumstances of this case the penalty imposed under section 28(1)(c) of the Income-tax Act upon the assessee is not legally valid. WE answer the second question of law, therefore, in favour of the assessee and against the income-tax department.