TaxTMI 
TaxTMI 
2006 (7) TMI 138
X X X X Extracts X X X X
X X X X Extracts X X X X
....t Commissioner in terms of clause (iii) of sub-section (1) of section 271 of the Income-tax Act, 1961?" The reference relates to the years 1974-75 and 1975-76. Briefly stated the facts giving rise to the present reference are as follows: The assessee is a firm carrying on business in grains, oils, etc., on own accounts as well as on "arhat". Its accounting year, for the assessment year 1974-75 ended on March 31, 1974. In respect of the said accounting year, the assessee earned arhat at the rate of 3 per cent, but in its accounts, it credited arhat at the rate of 2 per cent, only, reducing thereby the arhat income by Rs. 9,956. It was explained by the assessee that as there was dispute with regard to the charging of the arhat at a higher ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "1. Rs. 1,000 on account of business in the name of Sri Ram Samujh Yadav. 2. Rs. 4,500 in the name of Sri Mohd. Haneef. 3. Rs. 6,500 credited in the name of Sri Rajendra Kumar. In the context of the first addition of Rs. 1,000 in the name of Sri Ram Samujh Yadav, the Income-tax Officer has pointed out 'No evidence has been led to prove that Sri Ram Samujh Yadav was a genuine person and that the business in his name was actually his own. The Income-tax Officer has given detailed reason and the addition has been confirmed by the Commissioner of Income-tax (Appeals), in para. 9 of the appellate order. On this basis of the appellate order, the concealment to this extent is established." Regarding the other two items, the finding of the In....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Inspecting Assistant Commissioner was wrong in view of the proviso to clause (iii) of sub-section (1) of section 271 of the Income-tax Act, 1961. In respect of the assessment year 1975-76, the Income-tax Officer imposed penalty with respect to concealment of income of Rs. 23,927. In respect of this year also, the learned Appellate Assistant Commissioner deleted the penalty for the reasons given for the assessment year 1974-75. The Departmental contention for this year is the same as for the assessment year 1974-75. The assessee's objection to the imposition of penalty is similar to that raised in respect of the assessment year 1974-75, viz., since the additions made, in respect of which the penalty notice was issued, exceeded Rs. 1 lakh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the amendment of 1975 in the proviso to section 271(1)(iii). Earlier also, section 271(1)(iii) has to be given effect to subject to the provisions of section 274(2). The Legislature by the amendment Act has brought in the said two limbs together by inserting the proviso to section 271(1) (iii) and bringing in it the language of section 274(2), as far as possible, and deleting simultaneously section 274(2) from the Act. The original purpose of section 274(2), is, thus, now achieved by the proviso to section 271(1)(iii). The said purpose was to demarcate the cases in which the Income-tax Officer could impose the penalty by himself from those in which he could not act himself, but he had to refer the matter to the Inspecting Assistant Commis....