COMMISSIONER OF INCOME TAX Vs. SUBHAGCHAND KAPOORCHAND

JUDGEMENT

(1.) PURSUANT to the direction of the this court by an order dated September 16, 1976, a reference has been made by the Income-tax Appellate Tribunal, Patna Bench "A", under Section 256(2) of the I.T. Act, 1961 (hereinafter referred to as "the Act"), for the opinion of this court on the following question of law :

(2.) THE assessment year in question is 1964-65. THE statement of case as submitted by the Tribunal speaks out the facts on the record for the assessment year in question. THE assessee, as a firm, filed the return of income of Rs. 72,865. THE assessment was made on a total income of Rs. 1,34,192. It included disallowance of certain expenses and also an addition of Rs. 40,000 which represented the peak credits of certain hundi loans appearing in the books of the assessee.

(3.) THE learned senior standing counsel, appearing for the Revenue, submitted that, in the instant case, the assessee had not discharged the initial onus and the Explanation to Section 271(1)(c) was attracted in the case. He further contended that the assessee had not produced satisfactory evidence with regard to the genuineness of the loans which, in the submission of the learned senior standing counsel, lay initially upon it before the onus could be shifted upon the Department and the Tribunal had taken an erroneous view of law in deleting the penalty imposed by the IAC. He further contended that without there being a finding by the Tribunal that the assesses had discharged its initial onus, the deletion of penalty by the Tribunal was erroneous in law.