M.R.SHARMA, J. - (1.) IN this petition under S. 256 (2) of the IT Act, 1961 (hereafter called the Act), a prayer has been made on behalf of the Revenue that we should direct the Tribunal, Amritsar Bench, Amirtisar, to state the case and to refer the following question of law to us for opinion : "Whether on the facts and in the circumstances of the case, the Tribunal has misdirected itself in cancelling the penalty of Rs. 11,000/- imposed under S. 271 (1) (c) of the IT Act, 1961 ?"
(2.) THE Tribunal decided two appeals of the assessee for the asst. yrs. 1960-61 and 1961-62. The original assessment for the year 1960-61 was completed on 22nd March, 1965. The assessee was taxed on a total income of Rs. 48,022/-. This assessment was, however, set aside by the AAC of IT on 23rd July, 1969. In the meantime, the ITO found that a sum of Rs. 5,600/- was credited in the books of account of the assessee on 29th Oct., 1959, in the name of Gajanan goyal & Bros. Mandi, Gobindgarh. On a comparison of the entries, the ITO found that the debit entry in the books of the aforementioned firm was made in the name of the assessee on 20th Nov., 1955. The ITO, therefore, reopened the assessment and issued a notice to the assessee under S. 148 of the Act. This time the assessment was completed on 17th Feb., 1971, after the assessee had agreed to the addition of Rs. 5,600/- towards it total income. The ITO also initiated proceedings under S. 271 (1) (c) of the act and since the minimum penalty impossible exceeded a sum or Rs. 1,000/-, he referred the case to the IAC of IT under S. 274 (2) of the Act. Similarly, for the asst. yr. 1961-62, the ITO found a sum of Rs. 11,000/- purporting to have been deposited by Gajanand Goel & Bros., Mandi Gobindgarh, in the books of account of the assessee. The assessee also agreed to have this amount added towards it total income whereafter on 17th Feb., 1971, It was assessed to a total income of Rs. 91,030/- The ITO initiated penalty proceedings in the case also and reported the case to the IAC of IT because the penalty impossible was in excess of Rs. 1,000/-
(3.) IN the penalty proceedings for both the years, the assessee submitted the following reply; "1. That amount of Rs. 5,600/- was added in the income of the assessee in the asst. yr. 1960-61 and Rs. 11,000/- in the asst. yr. 1961-62 on account of difference in the date of credit in the account of Gajanand Goel. We are having a regular running account with the above party. It was pointed out to the ITO, that the amount was actually received from the said party on 29th Oct., 1959 and not on 20th Nov., 1959. The same was credited in the books on the date of its receipt. It was merely to bring an end to the matter that the assessee surrendered the amount, otherwise there has been no such income. It was also agreed that no penalty proceedings will be started hereby because an amount has been surrendered will not make it sufficient ground for the concealing of any income. There was no such income which could be said to have been concealed. Rajinder Kumar Karta of the HUF expired on 9th Jan., 1971 and earlier to this he was not feeling well for sufficient time. He wanted peace and as such the matter was brought to end. 2. That the ITO, who framed the assessment in this case has nowhere established the fact that the income from the said source was concealed. There has been nothing to establish and give rise to the inference that the disputed amount respresets income. The entirety of circumstances does not point out that the disputed amount represents income and that the assessee has consciously furnished the particulars of his income or had deliberately furnished inaccurate particulars (70 ITR 369 ; CIT vs. Khoday Eswarsa and Sons, 1972 CTR (SC) 295 : (1072) 83 ITR 369 (SC) and CIT vs. N. A. Mohamed Haneef (1972) 83 ITR 215 (SC). The IAC of IT did not accept the explanation offered by the assessee and imposed penalties in the sums of Rs. 5,600/- and Rs. 11,000/- under S. 271 (1)(c) of the Act for the asst. yrs. 1960-61 and 1961-62 respectively. ;