- (1.) THIS petition has been filed under section 256 (2) of the I. T. Act, 1961 (hereinafter referred to as the Act), praying that the Tribunal be directed to refer the following question for the opinion of this court: " 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) (c) read with the Explanation is not exigible ? "
(2.) BRIEFLY, the facts are that the assessee is a registered firm and carried on business of fabrication of staple cloth, purchase and sale of yarn and ready made cloth. During the accounting year ending March 31, 1968, relevant to the assessment year 1968-69, which is the second year of the assessee's business, the assessee filed two returns--one on August 9, 1968, declaring an income of Rs. 30,856 and the second on October 29, 1968, declaring an income of Rs. 31,211. The ITO noticed a cash credit of Rs. 20,000 in the name of Tarsem Lal in the books of the assessee on which no interest had been paid. The assessee made a statement that the amount had been brought by Tarsem Lal from Gian Chand who was a well to do person, but this explanation was not accepted by the ITO. Consequently, the amount was added to the assessee's income from undisclosed sources, vide his order of June 27, 1969.
(3.) THE assessee went up in appeal before the AAC, but it was dismissed on September 24, 1970. It went up in second appeal before the Appellate Tribunal which also met with the same fate on March 3, 1973. At the time of completing the assessment, penalty proceedings under section 271 (1) (c) of the Act were initiated by the ITO. As the minimum penalty imposable in the case exceeded Rs. 1,000, the matter was referred by the ITO to the IAC.;