- (1.) THIS is a writ petition by the department under article 226 of the Constitution challenging the jurisdiction of the Income -tax Appellate Tribunal to reduce the penalty levied by passing an order under section 35 of the Income -tax Act, 1922 (hereinafter referred to as the Act). The facts leading up to this writ petition are thes :
(2.) THE assessee (respondent No. 2) was a partnership firm which carried on business with its head office in Dehra Dun. Its business consisted of the selling agency of Tata Mercedes Diesel Oil trucks and in the purchase and sale of motor parts and accessories. For the purpose of assessment the case of the aforesaid firm fell within the jurisdiction of the Income -tax Officer, B -Ward, Dehra Dun, prior to its transfer to the charge of the Income -tax Officer, A -Ward, Dehra Dun (petitioner No. 1). The Income -tax Officer, B -Ward, Dehra Dun, who made the assessment against the assessee for the assessment year 1960 -61, discovered that the assessee had suppressed its income by a sum of Rs. 41,740 which the assessee had claimed as expenditure on account of insurance premia paid by it to various insurance companies on behalf of its numerous customers. The amount realised by the assessee from its customers towards the insurance premia was not recorded in its books of accounts. Penalty proceedings were initiated under section 28(1)(c) of the Act in respect of the said concealment and ultimately the Income -tax Officer by his order dated March 16, 1961, levied a penalty of Rs. 30,000, the maximum penalty leviable was Rs. 48,210 which was 1 1/2 times of the difference between the income returned which was Rs. 31,51,533 and the income assessed at Rs. 5,00,528.
(3.) THE assessee filed an appeal against the aforesaid order to the Appellate Assistant Commissioner of Income -tax, Dehra Dun. The Appellate Assistant Commissioner by his order dated September, 5, 1962, confirmed the levy of penalty and dismissed the assessees appeal. Thereupon, the assessee filed a second appeal before the Income -tax Appellate Tribunal under section 33 of the Act. The appeal was heard by a Bench of the Income -tax Appellate Tribunal at Delhi, known as Bench A, on the 1st of August, 1963, and by its order dated the 6th of August, 1963, dismissed the assessees appeal. This order read : 'This is an appeal against the order levying penalty under section 28(1)(c) of the Act. Penalty of Rs. 30,000 was imposed by the Income -tax Officer as according to him the assessee had concealed the particulars of its income by making a debit of Rs. 41,740 on account of insurance premiums paid to insurance companies on behalf of various customers on various dates, whereas the amounts which were received in respect of the same from the said parties were not recorded in the books of the assessee. Though it was admitted by the assessee that the receipts from the parties in respect of the insurance premium in question were not recorded in the books of the assessee, 'yet it was submitted that the amounts had been spent in the course of the assessees business. That is no explanation at all. Here is a case of deliberate suppression of the real particulars of the assessees income warranting levy of penalty under section 28(1)(c). We, therefore, do not see any justifiable reason for interfering with the order of the departmental officials. The appeal is, therefore, dismissed.' ;