CIT Vs. KANHAIYA LAL

JUDGEMENT

(1.) THE instant reference has been made by the Tribunal, Jaipur, under section 256(2) of the Income Tax Act at the instance of the revenue seeking opinion of this court on the following questions :

(2.) THE facts giving rise to the instant reference are that the respondent -assessee namely, Kanhaiya Lal Doshi is the partner in the firm M/s. Champalal Gordhanlal. In the course of search of his business in residential premises in December, 1983, certain documents, cash, silver, gold, bullion, etc. were found and seized. It revealed from the documents that the assessee was carrying on money -lending business, wherefrom income was earned, but the same was not disclosed in the tax returns. For the assessment year 1984 -85 the assessee returned an income of Rs. 1,27,169 inclusive of Rs. 1,06,584 as investment in money -lending business as per order under section 132(12). The total income was finally computed at Rs. 3,88,400. The assessing officer initiated penalty proceedings under section 271(1)(c) and levied a penalty of Rs. 1,64,900 being 125 per cent of the tax on concealed income.

(3.) IN view of the finding of fact record by the Tribunal and following the decision of the Apex Court in Khoday's (supra) the Tribunal held that it was not safe to sustain the penalty referable to the additions made on account of acquisition of silver and gold ornaments by the assessee. Accordingly, the penalty referable to an amount of Rs. 92,902 + Rs. 17,003 was cancelled.