ADDITIONAL COMMISSIONER OF INCOME TAX Vs. DWARKADAS DEVKINANDAN

JUDGEMENT

(1.) THIS is a reference at the instance of the Revenue to answer the following questions of law, namely: Assessment year 1966 -67:

(2.) THE relevant assessment years are 1966 -67 and 1967 -68. The assessee is a building contractor and also deals in furniture. He did not maintain proper accounts of his business and filed returns for these two assessment years on the basis of estimate showing the income of Rs. 14,000 each year, which was estimated on the basis of gross profits worked out at the rate of 15 per cent. The ITO assessed the assessee's income at Rs. 38,616 and Rs. 26,195, respectively, for these two assessment years applying a net profit rate at 13 per cent on receipt from construction work and 15 per cent on estimated sale of furniture. This was done with the agreement of the assessee who accepted these assessments. Thereafter, penalty proceedings were initiated by referring the matter to the IAC. The IAC rejected the assessee's explanation that there was no concealment of income and held that the assessee was liable to imposition of penalty in respect of both these years under s. 271(1)(c) of the INCOME TAX ACT, 1961 (hereinafter referred to as " the Act "). Penalty was accordingly imposed on the assessee for both these years. The assessee preferred an appeal to the Tribunal against imposition of these penalties. The Tribunal has allowed those appeals and set aside the penalties imposed for both the years. The only ground on which the Tribunal has decided in the assessee's favour is that computation of income at the time of assessment being on the basis of higher rate, there was no case for imposition of penalty. Aggrieved by the view taken by the Tribunal, the Revenue sought a reference under S. 256(1) of the Act and on that application being rejected by the Tribunal, this Court was approached for a direction under S. 256(2) of the Act. It is as a result of the direction given by this Court on the application made by the Revenue that the Tribunal has stated the case and referred the aforesaid questions for the decision of this Court.

(3.) IN view of the above conclusions reached by this Court, the matter has to go back to the Tribunal for a fresh decision by adverting to the above observations. For this reason, further arguments advanced on behalf of the assessee do not arise for consideration by us at this stage and it would be for the Tribunal to consider and decide all questions which arise for decision on this point.