COMMISSIONER OF INCOME TAX Vs. VASUDEO AGRAWALLA SRI

JUDGEMENT

(1.) THIS is a reference under Section 256(2) of the Income-tax Act, 1961. In this reference, we are concerned with the assessment year 1964-65. In the relevant year, the assessee was assessed in the status of an individual. He filed his return showing income of Rs. 1,09,775.96 which was ultimately assessed at Rs. 2,04,265. The difference between the assessed sum and the returned sum being more than 20%, penalty proceeding was initiated in terms of Section 271(1)(c) of the Act. No explanation was given by the assessee before the Inspecting Assistant Commissioner. The Inspecting Assistant Commissioner, therefore, imposed a penalty of Rs. 94, 560. The assessee being aggrieved by the order of the Inspecting Assistant Commissioner filed an appeal before the Tribunal. The Tribunal deleted the penalty holding that the Department had not proved that the difference was such which could by itself lead to an inference that the assessee had committed any fraud or gross or wilful neglect in returning the correct income and on that account the levy of penalty was cancelled.

(2.) BEING aggrieved by the order of the Tribunal, the Revenue moved the Tribunal for referring the case to this court for opinion. The application did not find favour with the Tribunal. It was, therefore, rejected. The Revenue then moved this court for a reference. This court being satisfied that a question of law was involved in the case called for a reference. In obedience thereto, the Tribunal has referred to this court the following question for our opinion :

(3.) FOR the reasons stated above, we are definitely of the view that the Tribunal has clearly erred in law in deleting the penalty imposed upon the assessee under Section 271(1)(c) for the assessment year 1964-65.