COMMISSIONER OF INCOME TAX Vs. MEGHRAJ RAMCHANDRA

JUDGEMENT

(1.) THIS court required the Income-tax Appellate Tribunal, Patna, under Section 256(2) of the income-tax Act, 1961 (hereinafter called "the Act"), to draw up a statement of the case and refer it to this court on the following question of law :

(2.) THE Tribunal accordingly has stated the case and referred the question of law aforesaid for answer by this court.

(3.) IN the penalty proceeding, the INspecting Assistant Commissioner recorded findings in his order dated June 16, 1964. The findings seem to be that 281 extra bags of sugar had been pledged with the bank, those bags had been purchased with finance outside the books and since the assessee had not attempted to show the source from which these purchases had been effected, the INcome-tax Officer was justified in treating the sum of Rs. 29,495 as the assessee's income from undisclosed sources. Merely on those findings, the INspecting Assistant Commissioner imposed a penalty of Rs. 8,600 on the assessee. It went up in appeal. The finding of the Appellate Tribunal based upon the examination of the stock register and other materials is that, as the stock register was severely checked by the officers of the supply department from time to time, the INcome-tax Officer had to establish the guilt of the assessee and mere falsity of an explanation or that the assessee could not prove its case could not be a ground for levy of penalty. The further finding seems to be that the stand of the assessee that an imaginary, inflated stock was shown to the bank seems to have been accepted by the INcome-tax Appellate Tribunal.