YASHWANT SINGH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal has referred the following question of law arising out of its order dt. 9th Nov., 1985, in respect of the asst. year 1980 81 under S. 256(1) of the Act :

(2.) THE brief facts of the case are that the assessee has shown withdrawals of Rs. 11,439 on account of household expenses. The ITO was not satisfied with this low figures of withdrawals and an addition on that account was made. The Tribunal maintained the expenses at the figure of Rs. 25,800. In the assessment order, the ITO referred to the enquiry report of the inspector which was duly signed by the assessee. The two sons of the assessee were studying in St. Anthony School, the assessee admitted a sum of Rs. 720 in respect of school fee and Rs. 780 in respect of tuition fee, and the tutors were paid Rs. 200 to Rs. 300 per month per child during examination days. On that basis, an expenditure of Rs. 3,600 was estimated. The messing expenses were explained by the assessee for Rs. 6,000 only which were estimated at Rs. 300 per person per month. The miscellaneous expenses were admitted at Rs. 60 per month for maid servant and mali. The expenses for washerman were not included and such expenses were included at Rs. 60 per month. The milk expenses for maintaining the cow at the residence at Rs. 200 per month were estimated. The water and electricity expenses were explained to have been met by the mother of the assessee but she was having the withdrawal of Rs. 2,050 for the whole year, and therefore, such expenses were estimated at Rs. 200 per month, keeping in view the fact that refrigerator, air cooler and other electrical installations are available with the assessee. The Lions' Club membership was admitted at Rs. 500 per annum. The expenses for cloth and daily items were admitted at a figure of Rs. 2,500 but the ITO estimated the expenses at a figure of Rs. 200 per month per member for cloth, cosmetics, soap, oil and other luxury items. As a result of this an addition of Rs. 35,261 was made, treating it as income from undisclosed sources.

(3.) THE ITO initiated penalty proceedings under S. 271(1)(c) and after hearing the assessee penalty of Rs. 7,000 was imposed. The AAC came to the conclusion that the assessee furnished inaccurate particulars consciously. The amount of penalty was, however, restricted to 100 per cent of the tax levied. The order of the AAC was challenged before the Tribunal. It was found that even during the penalty proceedings or even before the Tribunal, the assessee could not substantiate as to how he could have lived within the amount shown by him. The penalty was upheld. Learned counsel for the assessee submitted that the expenditure estimated and maintained by the Tribunal was only an estimate and, on that basis, penalty cannot be levied.