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Petitions by revenue under s. 256(2) of the I.T. Act for order directing Tribunal to state a case and refer questions of law arising from Tribunal's order dated March 24, 1975. Assessment of undisclosed income, imposition, and cancellation of penalty under s. 273(a) for concealment of income. Analysis: The High Court of Delhi heard two petitions by the revenue under s. 256(2) of the Income Tax Act, 1961, seeking an order directing the Income-tax Appellate Tribunal to state a case and refer questions of law arising from the Tribunal's order dated March 24, 1975. The Tribunal had earlier held that no question of law arose and the findings were factual, rejecting applications under s. 256(1) of the Act. The case involved an assessee, late Shri R. Dalmia, where Rs. 14 lakhs were added to his income from undisclosed sources in the assessment year 1954-55 due to unexplained cash credit in the books of a company under his control. The Tribunal upheld this addition initially. Subsequently, a penalty of Rs. 12 lakhs was imposed on the assessee for concealing income. However, the Tribunal, in an order dated March 24, 1975, canceled the penalty, stating that the charge of concealment remained unproved. The assessee had explained the cash credit by selling preference shares to Jaipur Traders Ltd., but the revenue authorities found this explanation false, adding the amount to the assessee's income. The court referred to the principle laid down in CIT v. Amway Ali [1970] 76 ITR 696, emphasizing that the revenue must establish conscious concealment or deliberate furnishing of inaccurate particulars for imposing a penalty. The revenue argued that the assessee adopted a device to conceal income, but the court disagreed, finding it a case of falsity of explanation rather than deliberate concealment. The court distinguished the case from D. M. Manasvi v. CIT [1972] 86 ITR 557 (SC), stating that the revenue failed to prove deliberate concealment. Additionally, a penalty under s. 273(a) for filing an untrue advance tax estimate was discussed. The court held that as the assessee could not anticipate the addition to his income, he did not file an advance tax estimate knowingly or believing it to be untrue. Ultimately, the High Court upheld the Tribunal's decision, stating that no questions of law arose, and dismissed the revenue's applications. The court found that the revenue had not established conscious concealment of income or deliberate furnishing of inaccurate particulars by the assessee, leading to the dismissal of the petitions.
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