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TMI Blog1976 (5) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing question on which they have differed has been referred to me by the President under s. 255(4) of the IT Act, 1961 :— "Where the order imposing penalty in this case is justified and has to be upheld or it requires to be cancelled ?" 2. The facts of the case have been very elaborately set out in the orders of the learned Members and I shall, therefore, refrain from repeating them except to the bare extent necessary. The assessee is a gold-smith by profession. For the asst. yr. 1962-63 he filed a return showing an income of Rs. 4,565 comprising an income from property of Rs. 1,655 and an estimated income of Rs. 3,000 from the Sunari business. The ITO was of opinion that having regard to the low house-hold drawings and the financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order was dt. 25th March, 1972. 4. The penalty order has been challenged by the assessee on a number of grounds. In the first place, it has been argued that this was not a case in which the ITO should have made a reference to the IAC because the amount of concealed income is less than Rs. 25,000. In this connection, it is pointed out that while the ITO computed the total income at Rs. 30,000, the AAC had allowed a relief of Rs. 5,000 with the result that after the appellant order, the total income itself was only Rs. 25,000. Thus the amount of concealed income is very much less than Rs. 25,000 and hence a reference to the IAC is not competent. On behalf of the assessee it is argued that even at the time the ITO made a referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income. Sec. 274(2) however, casts a duty upon the ITO to determine the income in respect of which he alleges concealment of furnishing of inaccurate particulars. Even the learned Accountant Member who has decided the case in favour of the Revenue has accepted the position that there should be a finding in the order of the ITO regarding the quantum of income concealed. He has proceeded to consider the order of assessment and he has concluded that since the total income has been determined at Rs. 30,000 as against the returned income of Rs. 4,565 it should be taken that there is an implied finding by the ITO that the concealed income is more than Rs. 25,000. At the time of the hearing before me, however, some light has been thrown on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds to the minimum penalty being likely to exceed Rs. 25,000, this is obviously incorrect. He has been able to pin-point only one item of concealed income and he has made reference to a speculation business which have no relevance a tall. This back-ground, therefore, shows that the ITO had intended to initiate penalty proceedings only with reference to the sum of Rs. 20,000. In other words, the amount of concealed income being Rs. 20,000, the minimum penalty imposable was also only Rs. 20,000. In this state of the record, a reference to the IAC by vaguely enhancing this figure by referring to some speculation business does not appear to be justified. I am, therefore satisfied that on the facts and in the circumstances of this case, the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition would be based on a part acceptance of an admission by the assessee. The assessee makes an admission that the sum belonged to him and that it represented his past savings. The first part of this statement is accepted but not the second. A penalty cannot be based on such a piece-meal acceptance of a statement made by the assessee, particularly having regard to the observations made by the ITO himself that it was very doubtful whether the assessee had at all made the gifts in question. For this reason also, I would agree that a penalty cannot be imposed in the present case. 7. I also think that even on the merits, the imposition of a penalty is not justified. The assessee has made certain investments in the asst. yr. 1959-60. He has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stments in the earlier year and the whole thereof in the current year remained unexplained. I agree with the learned Judicial Member that there is no difference in principle between the addition made in the asst. yr. 1959-60 and the addition made in the current year. The fact that for the earlier year only a part of the addition was sustained whereas in the year under appeal the whole of the addition has been sustained, would not in my opinion make any difference. If in the view of the Tribunal the addition made for the asst. yr. 1959-60 did not attract the provisions of s. 271(1)(c). I think that on the same basis it should be held that the addition made in the year currently under appeal does not also attract the provisions of s. 271(1)(c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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