ADDITIONAL COMMISSIONER OF INCOME TAX Vs. CHANDMULL RADHA KISHUN

JUDGEMENT

(1.) BY this reference under Section 256(2) of the Income-tax Act, 1961, the following question has been referred to us for our opinion :

(2.) IN these two tax cases, we are concerned with the assessment years 1964-65 and 1965-66. The assessee returned a sum of Rs. 87,712 and Rs. 82,366, respectively, for the two assessment years. The Appellate Assistant Commissioner assessed at Rs. 1,22,984 and Rs. 1,10,403 for the assessment years. A difference of more than twenty per cent. having been found, the INcome-tax Officer was of the view that there had been concealment of income by the assessee. Since in his view, the penalty likely to be imposed would be above Rs. 1,000, he referred the matter to the INspecting Assistant Commissioner. The latter imposed penalties of Rs. 6,230 and Rs. 4,183, respectively, for the two years. The penalty matter went up in appeal to the Tribunal which set aside the order of penalty of the INspecting Assistant Commissioner on the ground that the assertion by the assessee in regard to his return was sufficient to discharge the onus. The Tribunal relied upon Hindustan Steel Limited v. State of Orissa [1972] 83 ITR 26 (SC), in which it has been held that no penalty could be imposed unless the party acted in deliberate defiance of law or was guilty of contumacious or dishonest conduct, or had acted in conscious disregard of his obligation. The deletion of penalty, on this ground, was not accepted by the Commissioner. An application for reference under Section 256(1) of the Act was, therefore, filed, but without any success. The Commissioner got the present reference made under Section 256(2) of the Act. IN terms of the direction of this court, the question referred to above has been sent to us. At the time of hearing of these tax cases, Mr. Rameshwar Prasad, learned counsel for the assessee, filed an affidavit enclosing the order of the INcome-tax Appellate Tribunal dated August 30, 1972, passed in I. T. A. Nos. 2296-Pat. and 2297-Pat. of 1969-70, which shows that in the assessment, substantial relief had been given to the assessee. On the basis of this order of the Tribunal, Mr. Rameshwar Prasad submitted that the assessee's returned figure was more than 80 per cent. of the final assessed sum and, therefore, there was no case for imposition of penalty.