PHUSRAJ GANGABISHAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, by its order dated March 29, 1972, has referred the following question of law to this court for its opinion under Section 256(1) of the I.T. Act, 1961, as arising out of its order dated September 14, 1971 :

(2.) THE facts leading to the making of this reference may be briefly stated : M/s. Phusraj Gangabishan of Nokha, District Bikaner (hereinafter called "the assessee"), is a wholesale dealer in foodgrains. In its return of income relating to the assessment year 1965-66, the assessee fraudulently concealed part of its income and furnished inaccurate particulars of its income. Certain fictitious cash credit entries were shown, which were discovered during the course of assessment proceedings to represent the income of the assessee from undisclosed sources. THE ITO, B-Ward, Bikaner, who was the assessing authority in relation to the assessee, while passing the order of assessment on April 14, 1967, held that the assessee had concealed part of its income and as such issued a notice to the assessee under Section 271(1)(c) read with Section 274(2) to show cause why penalty should not be imposed upon it. As the minimum penalty imposable upon the assessee, in the circumstances of the case, exceeded a sum of Rs. 1,000, the assessing authority referred the case relating to levy of penalty to the IAC, Bikaner Range, Bikaner, under the provisions of Section 274(2) of the Act. After making an enquiry, the IAC held that the facts of the case proved beyond reasonable doubt that the assessee had income from undisclosed sources in respect of which fictitious cash credit entries were made and by making inflated claims for salary paid to employees and in other manner, the assessee concealed part of its income. As such a penalty of Rs. 15,000 was imposed by him upon the assessee under Section 271(1)(c) of the Act.

(3.) IF the minimum penalty imposable under Clause (iii) of Sub-section (1) of Section 271 exceeded a sum of Rs. 1,000, the ITO was required to refer the case to the IAC, on whom the powers regarding imposition of penalty were conferred by Section 274 of the Act, which was as under at the relevant time: