COMMISSIONER OF INCOME TAX Vs. A RAHMAN

JUDGEMENT

(1.) In these two tax cases a common question of Jaw has been referred to this court by the Income-tax Tribunal, " B" Bench, Patna, and as such this judgment will govern both the cases. The question of law referred is in the following terms :

(2.) The relevant facts are these :

(3.) The assessment years in the two tax cases are 1965-66 and 1966-67, respectively. The returns in both the cases were filed on March 1, 1967, showing an income of Rs. 1,500. The ITO estimated the income at Rs. 4,900 for each of the assessment years and completed the assessment by order dated June 26, 1969. On that very day, the ITO was of the opinion from the statement of account of the assessee with the Punjab National Bank that an amount of Rs. 79,146 in the case relating to the assessment year 1965-66 and Rs. 96,181 in the other case relating to the assessment year 1966-67 had escaped assessment besides bank interest of Rs. 65 in one case and Rs. 285 in the other case which were also not disclosed. Accordingly, a notice under Section 148 of the I.T. Act, 1961 (hereinafter to be called as " the Act "). was issued. In response to the said notice the assessee filed a return declaring an income of Rs. 11,294 in one case and Rs. 13,176 in the other. The ITO on the basis of this return computed the assessment at a figure of Rs. 12,091 and Rs. 14,145 for the aforesaid two years respectively. The net profit, therefore, calculated on those figures at the rate of 9% on the escaped income came to Rs. 7,125 in one case and Rs. 8,657 in the other. Thus, the ITO held that the income which was concealed by the assessee from his original return comes to Rs. 7,191 (that is, Rs. 7,125 plus Rs. 66) and in the other comes to Rs. 8,945 (that is, Rs. 8,657 plus Rs. 288). It is in respect of these amounts relating to the assessment years 1965-66 and 1966-67 that penal proceedings were initiated by the ITO under Section 271(1)(c) of the Act on the ground that the assessee did not disclose one of the sources of his income, namely, from supply business with Telco Ltd. at the time of the original assessment. As the returned income was found to be less than 80% of the assessed income and the minimum penalty imposable exceeded Rs. 1,000, the ITO referred the matter to the IAC under the Act.