(1.)These two Income Tax reference relate to the assessment years 1957-58 and 1958-59 and involve a common question which can be disposed of by a common order though the principal question involved in this reference has already been decided by a Bench of this court to which one of us was a party in Addl. CIT V/s. Joginder Singh, 1985 151 ITR 93. It is necessary to state a few facts in order to appreciate the arguments addressed by the learned counsel for the applicant.
(2.)The facts are as follows : For the assessment years 1957-58 and 1958-59, the assessed, Bawa Singh Chawhan (who is now no more and is represented by his legal representatives), filed his returns of income long prior to March 31, 1968. His assessments were completed for the assessment year 1957-58 on December 22, 1961, on an income of Rs. 21,600 and for the assessment year 1958-59 on December 22, 1962, on a total income of Rs. 11,600. Subsequently, the ITO started proceedings under s. 147(a) of the I.T. Act, 1961, as he had reason to believe that by reason of the omission or failure on the part of the assessed to disclose fully and truly all material facts necessary for his assessments for the above two years, income chargeable to tax had escaped assessment. In response to the notices issued under s. 148 of the Act, the assessed filed returns of income. For the assessment year 1957-58, he filed a return on December 20, 1966, declaring an income of Rs. 10,400, substituted it by another return showing the same income on August 4, 1967, and then filed a revised return showing an income of Rs. 21,600 on July 30, 1968. Similarly, for the assessment year 1958-59, a first return showing an income of Rs. 10,400 was filed on December 19, 1966, a revised return showing the same income was filed on August 4, 1967, and a revised return showing an income of Rs. 11,600 was filed on July 30, 1968. The ITO completed the assessments on December 31, 1968, for both the years, the total income assessed being Rs. 26,063 and Rs. 16,063, respectively. It may be mentioned that during the course of the reassessment proceedings, the assessed had submitted a letter to the Commissioner on December 20, 1968, agreeing that his assessments for the assessment years 1947-48 to 1959-60 could be revised and additions could be made thereto of sums of Rs. 12,629 for each of the assessment years 1947-48 to 1952-53 and Rs. 3,262 for each of the assessment years 1957-58 to 1959-60. In the reassessments made on December 31, 1968, the additional made to the income originally assessed principally comprised of this admitted addition of Rs. 3,263.
(3.)Simultaneously with the completion of the reassessment proceedings, the ITO also initiated penalty proceedings under s. 274 read with s. 271 of the I.T. Act. Subsequently, on June 27, 1969, the penalty proceedings were referred by the ITO to the IAC under s. 274(2) of the Act. The IAC, after issuing notice to the assessed and hearing his Explanationns, came to the conclusion that as the assessed has concealed the income Rs. 3,263 for each of the years under consideration, a penalty of Rs. 3,263 equal to the amount of income concealed, should be levied upon the assessed for each of the assessment years. He directed accordingly.