Shyamal Kumar Sen, J. - (1.) In this reference under Section 256(2) of the Income-tax Act, 1961, the following questions have come up for determination : " 1. Whether there was any material or evidence before the Tribunal to justify that the sum of Rs. 55,971 represented concealed income of the appellant-firm and whether the order of the Tribunal is otherwise unreasonable and perverse ?
(2.) Whether the Tribunal was right in holding that the Explanation to Section 271(1)(c) of the Income tax Act, 1961, applied in this case and that the assessee failed to discharge the onus that lay upon it under the said Explanation ?" 2. The facts, inter alia, are that the assessee is a registered partnership firm. The assessment year involved is 1972-73 relevant to the accounting year ending on December 31, 1971. For the aforesaid year, the assessee filed its return declaring a total income of Rs. 25,450 on July 31, 1972. During the course of assessment proceedings, the Income-tax Officer found that in each of the two partners' accounts a sum of Rs. 56,735.50 stood credited. The assessee explained that the above sum represented the amount which the assessee was entitled to introduce in its hooks of account as per the settlement made with the Commissioner of Income tax on December 29, 1970, under Section 271(4A) of the Income tax Act. The assessee had filed a petition under Section 271(4A) to the Commissioner for the assessment years ,1960-61 to 1965-60 disclosing a sum of Rs. 1,15,000 representing certain hundi loans and a settlement as detailed in the order of the Commissioner was arrived at. Clause 7 of the terms of the above settlement is as follows : " The assessee shall be allowed to introduce in its hooks of account 50 per cent, of the disclosed amount or an amount equivalent to the tax and penalty liabilities arising as a result of the settlement, whichever is higher."
(3.) Before the Income-tax Officer, the assessee claimed that an amount of Rs. 1,13,471 was introduced and credited in the accounts of the partners as per the above settlement. The Income-tax Officer was, however, not satisfied with the explanation given by the assessee, He hold that only a sum of Rs. 57,500 which was greater than Rs. 56,962 representing the total tax cum-penalty liabilities arising on settlement under Section 271(4A) could be introduced in the books of account. He allowed the benefit of the above amount and added the balance of Rs. 57,500 as the income of the assessee from undisclosed sources.;