COMMISSIONER OF INCOME TAX Vs. KESHRIMAL PARASMAL

JUDGEMENT

(1.) THE Commissioner of Income-tax, Jodhpur (" the CIT ") has filed this application under Section 256(2) of the Income-tax Act, 1961 (for short " the Act "), for a direction to the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur (hereinafter referred to as " the Tribunal "); to state the case and refer the following question of law for the opinion of this court:

(2.) THE assessee-respondent is a registered firm comprising of five partners. During the course of assessment proceedings for the assessment year 1977-78, the Income-tax Officer (ITO) came across a cash credit of Rs. 10,000 in the name of M/s. Bherunath Mohanlal & Co., Pali, a concern belonging to one Shri Mohanlal. THE assessee surrendered this entry of cash credit before the Income-tax Officer and confessed to it being a havala entry. THE Income-tax Officer, however, did not initiate penalty proceedings under Section 271(1)(c) of the Act with reference to the above surrendered amount of Rs. 10,000. THE Commissioner of Income-tax initiated proceedings under Section 263 of the Act on the following grounds :

(3.) WE have heard Mr. J.L. Daga, learned counsel for the Revenue, and Mr. R. Mehta, learned counsel for the assessee.