COMMISSIONER OF INCOME TAX Vs. SHISHPAL

JUDGEMENT

(1.) THIS is a reference made at the instance of the Revenue under Section 256(1) of the Income-tax Act, 1961, to answer the following question of law, namely :

(2.) THE necessary facts are that the assessee was apprehended by the customs authorities at Banner on May 16, 1979, and was found possessing precious stones of the value of Rs. 64,503. Since the assessee could not prove the acquisition/source of investment in the precious stones, the Income-tax Officer brought to tax the unexplained investment by resorting to Section 69 of the Income-tax Act, 1961, and directed for issuance of penalty notice including notice under Section 274 read with Section 271(1)(c) of the Income-tax Act, 1961. He had levied a penalty of Rs. 32,256 by order dated June 19, 1985. THE Commissioner of Income-tax (Appeals) cancelled the entire penalty on the basis that while the addition in the quantum appeal itself was deleted, there was no case for penalty under Section 271(1)(c) of the Income-tax Act.