- (1.) AFTER the Income-tax Officer has passed the assessment order regarding the assessment year 1961-62, the following note was recorded : "the assessee concealed income of Rs. 8,000 from undisclosed sources. Therefore, the penalty proceedings tinder Section 271 (1) (c) had been started separately. "
(2.) AS the minimum penalty imposable was more than Rs. 1,000 the case was referred to the Inspecting Assistant Commissioner under Section 274 (2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act" ). After hearing the assessee, the Inspecting Assistant Commissioner came to the conclusion that the escapement was with regard to Rs. 69,228 in addition to Rs. 8,000, He, therefore, levied a penalty of Rs. 25,000. The assessee appealed to the Appellate Tribunal and the Appellate Tribunal reduced the quantum of penalty. With regard to the sum of Rs. 8,000 it held that a sum of Rs. 3,000 had not been concealed. With, regard to the balance amount, of Rs. 5,000 it took the view that, in view of the Supreme Court decision in Commissioner of Income-tax v. Anwar Ali, [19703 76 I. T. R. 696 (S. C. ). , no penalty was exigible. However, it reduced the amount of undisclosed income from Rs. 69,223 to Rs. 35,419 and added to it a sum of Rs. 6,800 which had been received by the directors of the firm as salaries. The assessee was dissatisfied with this order and moved the Tribunal under Section 256 (1) of the Act for referring the following questions of law for the opinion of this court: " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that penalty under Section 271 (1) (o) was exigible ? (2) Whether, on the facts of the case, (sic) the Income-tax Officer's observation that the penalty proceedings were started for concealment of Rs. 8,000, the Inspecting Assistant Commissioner could treat the amount of Rs. 69,228 as an item of concealment ? and (3) Whether, on the facts of the case, the Tribunal was right, in law, in directing that the penalty be recomputed with respect to the sustained addition of Rs. 35,419 out of commission and Rs. 6,800 on account of salary and when the amount of Rs. 6,800 was not treated as an item of concealment by the Inspecting Assistant Commissioner who levied the penalty ? " 2. This is how the reference has been placed before us.
(3.) THE short contention of the learned counsel for the assessee is that the Income-tax Officer had merely determined that the concealment was with regard to the item of Rs. 8,000. Therefore, according to the learned counsel, no penalty could be levied on any other amount. On the other hand, Mr. Awasthy, learned counsel for the department, contends that in view of the following expression used in Section 274 (2) of the Act: ". . . . . . shall. . . . . . have all the powers conferred under this Chapter for the imposition of penalty; ";