Sabyasachi Mukharji, J. - (1.) In this reference under Section 256(1) of the I.T. Act, 1961, the following question has been referred to this court: " Whether, on the facts and in the circumstances of the case, the Tribunal was right in cancelling the penalty levied upon the assessee under the Explanation to Section 271(1)(c) of the Act relating to the assessment year 1964-65 ? "
(2.) The statement of the case relates to the penalty levied under Section 271(1)(c) of the I.T. Act, 1961, relating to the assessment year 1964-65.
(3.) The assessee is a registered firm stated to be engaged in the manufacture and sale of steam and hydraulic packings. It declared income of Rs. 55,721 in its P & L A/c, for the assessment year concerned 1964-65, corresponding to the previous year ending on 31st March, 1964. In the proceedings for assessment to tax, the ITO found credits in the accounts of four hundiwallas. The ITO held that, in the absence of satisfactory evidence, the assessee had agreed to the taking of the peak credit of Rs. 15,000 as its income from undisclosed sources, the ITO started penalty proceedings under Section 271(1)(c) read with Section 274(2) of the Act and as the minimum penalty leviable exceeded Rs. 1,000, the case was referred to the IAC for the purpose of levying penalty. The IAC held that the onus had not been discharged by the assessee and that the assessee could be penalised tinder the Explanation to Section 271(1)(c). He further held : " I find that the return of income was filed only on 19th July, 1968, Actually, the amount of penalty leviable would be based on the provisions of the I.T. Act applicable to returns filed after 1st April, 1968. In such case penalty will be a minimum of the income sought to be evaded and maximum of twice the amount. In the instant case income sought to be evaded would be Rs: 15,000 and interest wrongly claimed of Rs. 1,485, amounting in all to Rs. 16,485, and this is minimum penalty leviable. Taking into account all circumstances of the case, I hereby impose penalty of Rs. 16,500 Under Section 271(1)(c) of the I.T. Act, 1961." ;