ADDITIONAL COMMISSIONER OF INCOME TAX Vs. KASHIRAM MATHURA PRASAD

JUDGEMENT

(1.) ON the direction of this court, the Income-tax Appellate Tribunal, Patna Bench, has stated a case with regard to the following question of law :

(2.) THE assessee is a registered firm and the assessment year is 1966-67. For the return of the aforesaid period, the ITO made an estimated addition of Rs. 20,000 in the mustard oil account, Rs. 7,200 in the arhat account and Rs. 9,000 under Section 68 of the I.T. Act respectively. THE assessee had shown Rs. 9,000 as deposit of Rs. 1,500 each from the six partners. In the absence of necessary and conclusive evidence regarding the nature of these deposits, the same were added as income of the assessee. In rejecting the assessee's case of deposit, the ITO took certain circumstances into consideration. In appeal before the AAC of Income-tax, the assessee disputed the aforesaid additions. THE additions of Rs. 20,000 and Rs. 7,200 were maintained by the AAC. With regard to Rs. 9,000, the unexplained deposit, the case of the assessee was that Rs. 1,500 was introduced by each of the six partners from their past savings and that was in keeping with their status and such introduction could not be ruled out. In the alternative, it was argued that if the explanation about the deposits was not accepted, the assessee be given the advantage of telescoping of this amount in view of the substantial addition made in the trading accounts. As there was an addition of Rs. 27,200 in the trade accounts for the deficiency of profit, the AAC deleted the addition of Rs. 9,000 and gave the assessee " the benefit of telescoping ".

(3.) IT was further laid down that penalty could not be levied solely on the basis of the reasons given in the original order of assessment.