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TMI Blog1979 (10) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the penalty of Rs. 20,000 under section 271(1)(c) of the Income-tax Act, 1961 ? 2. Whether, the Income-tax Appellate Tribunal was right in law in holding that the Income-tax Officer had no jurisdiction to refer the case to the Inspecting Assistant Commissioner and, therefore, the penalty cannot be sustained ? 3. Whether, the finding of the Tribunal that the income of Rs. 20,000 was only chargeable to tax as income from undisclosed source in the assessment year 1971-72, is correct in law and sustainable from the material on record ? " In our opinion, if no reference could be granted on questions Nos. 1 and 3, question No. 2 would be rendered academic and we would, therefore, consider first whether this is a fit and proper case, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs for the assessment year 1971-72. The proceedings came to be referred to the IAC as the ITO was of the view that the minimum penalty leviable exceeded Rs. 25,000. The IAC came to the conclusion that the investment in question was made out of some undisclosed income of the assessee and that, therefore, there was a concealment of particulars of income to the extent of Rs. 25,000 in the assessment year in question. In view of the said finding, the IAC levied a penalty of Rs. 20,000 under s. 271(1)(c) and directed the ITO to issue demand notice and challan accordingly. In appeal, the I.T. Appellate Tribunal held, on merits, that it was not clear that the investment of Rs. 20,000 in the construction of the property in question had been mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant case, as earlier pointed out, in the assessment proceedings the addition of Rs. 1,75,000 as the assessee's income from undisclosed sources had been made and such income has been spread over a number of years, so to say, because the assessee did not question such inclusion and agreed to the spread over of such income in order to avoid taxation at the higher rate in any one particular year. There has been no dispute indeed it cannot possibly be disputed having regard to the findings recorded by the taxing authorities that apart, from the assessment proceedings there was nothing which would justify the conclusion that, in fact, the assessee had derived income to the extent of Rs. 20,000 in the corresponding account year and that he was gui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the Revenue before the Supreme Court that the alleged understanding or agreement between the assessee and another party therein appeared only from what the assessee's counsel stated before the Tribunal and that there was no material on record in support of that statement and that, therefore the penalty was justified. The Supreme Court rejected that contention in the following words (p. 547): "Assuming that the fact of agreement with D.J.C. appeared only in counsel's statement, there is nothing on record to suggest that the Department challenged the truth of the statement or questioned the propriety of acting on it. The agreement with D.J.C. is a fact appearing from the order of the Tribunal, and that is sufficient for the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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