COMMISSIONER OF INCOME TAX Vs. GOPAL VASTRALAYA

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the I.T. Act, 1961 (hereinafter to be referred to as " the Act"), and in the statement of case submitted by the Tribunal the following question has been referred for the opinion of this court:

(2.) FROM the statement of the case, the relevant facts which emerge are these. The assessee is a HUF. The assessment year in question in this reference is 1963-64 corresponding to the previous year RN 2019. The assessee filed a return showing an income of Rs. 5,560. In the course of the assessment proceedings, however, the ITO added various cash credits and some amount for inadequate drawings for household expenses and thereby computed the total income of the assessee at Rs. 48,598. Penalty proceedings were initiated under Section 271(1 )(c) of the Act. The minimum penalty imposable exceeded Rs. 1,000. Therefore, the ITO referred the matter to the IAC under Section 274(2) of the Act. The IAC gave a reasonable opportunity to the assessee of being heard and after considering the explanation offered by the assessee, a penalty of Rs. 6,750 was imposed by him. The order of the IAC has been annexed as annex. A to the statement of case.

(3.) IN the name of the son of the karta of the HUF (the assessee), namely, Shri Lakshminarain Daga, there was a cash credit of Rs. 4,081 and in the name of the karta's brother, namely, Shri Ramjiwan Daga, there was another cash credit showing Rs. 10,500. There was a third item in the name of Kishanji Sewak, an employee of the assessee-HUF, and a sum of Rs. 900 was shown against him. These are the only 3 items with which we are concerned. IN regard to all other items of cash credit, which had been explained by the assessee-HUF but not accepted by the revenue authorities, the Appellate Tribunal in appeal upheld the contention or the explanation offered by the assessee. It was only with regard to these 3 items as aforementioned in which the assessee's explanation was not accepted even by the Tribunal as was done by the revenue authorities below. With regard to these 3 items, it is worthwhile to take note of what the IAC has held. Apropos of the sum of Rs. 4,081, it has been merely held that there were contradictions in the assessee's explanation. With regard to the second item of Rs. 10,500 in the name of Shri Ramjiwan Daga, it was held that: "... ...It is difficult to believe that the amount was kept by his aunt for 15-18 long years on her person, which she deposited with the assessee-HUF on his, i.e., Ram Jiwan Daga's instructions. The story put forward by Shri Ram Jiwan Daga is indeed too naive to be believed. Apparently 'the sum in question belonged to the assessee-HUF which it deposited in the name of a third party, i.e.,' Ramjiwan Daga, so that it may pass off as a genuine deposit."