SINGH, J. - (1.) THE Tribunal, Allahabad Bench, Allahabad has under S. 256(1) referred the following question:- "Whether on the facts and in the circumstances of the case the Tribunal was legally correct in cancelling the penalty of Rs. 1,02,000 levied under S. 271(1)(c) of the IT Act, 1961 ?". The facts relating to the question of penalty may be shortly stated :-
(2.) THE assessee and his mother; Smt. Shanti Devi had created a trust by an instrument dt. 26th Sept., 1950 which was subsequently modified by another instrument dt. 21st Oct., 1955. The ITO took the view that the trust was a revocable trust, and hence the income from the trust was assessable in the hands of the two founders. An amount of Rs. 54,000 representing one half of the income of the trust was included in the assessment of the assessee. A further amount of Rs. 27,429 was added as accrued interest income from Roopnarain Ramchandra since dissolved. Apart from these two additions, the ITO added an amount of 50,000 as income from undisclosed sources. The Tribunal in the quantum appeal deleted the addition of Rs. 27,429 which was added by way of accrued interest. A reference application made by the Department in respect of this amount was dismissed by the Tribunal as also by this Court. As regards the inclusion of one half of the trust income amounting to Rs. 54,000 the Tribunal held that the trust was an irrevocable trust and as such, the income thereof could not be assessed in the hands of the assessee. The addition of Rs. 50,000 was also deleted. Subsequent to the assessment order, proceedings under S. 271(1)(c) of the Act were initiated against the assessee for concealment of the aforesaid amount. So far as the deletion of Rs. 27,429 and Rs. 50,000 is concerned, that has become final. As regards the trust income in ITR No. 477 of 1973, decided on 9th July, 1975, CIT, Kanpur vs. L. Ramchanra Charitable Trust Kanpur, we have held that an irrevocable trust was created by the two instruments dt. 26th Sept., 1950 and 21st Oct., 1955 and, as such, the income was not liable to be taxed in the hands of the assessee. The Tribunal deleted the penalty on account of the findings given in the quantum appeal. In view of our decision aforesaid the trust income cannot be added to the income of the assessee, and the other two amounts on the basis of which the penalty was imposed have already been deleted in the quantum appeals. Thus no occasion for imposition of penalty under S. 271(1)(c) arose.
(3.) WE accordingly answer the question in the affirmatives against the Department and in favour of the assessee. The assessee is entitled to his costs which we assess at Rs. 200.;