TMI Blog2005 (2) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... section 256(2) of the Income-tax Act, 1961, hereinafter referred to as "the Act", for opinion to this court: "Whether, the penalty imposed is legally sustainable in view of the evidence already furnished?" The present reference relates to the assessment year 1977-78 in respect of the penalty proceeding under section 271(1)(c) of the Act. Briefly stated the facts giving rise to the present reference are as follows: The applicant is being assessed to income-tax in the status of an individual. He was a partner in the firm, M/s. Sunder Timber Mart. On December 4, 1976, a search was conducted in the residential premises of the applicant. During the search some assets including cash of Rs. 57,000 were found. At the time of search, the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not require that a person should not keep his earnings in cash and the amount had been returned to the depositors through cheques. It was further stated that the depositors who have filed their affidavits, have not been cross-examined and, therefore, the penalty imposed cannot be sustained. The Commissioner of Income-tax (Appeals) had accepted the plea raised by the applicant and cancelled the penalty. Feeling aggrieved, the Revenue preferred an appeal before the Tribunal. The Tribunal after considering the various submissions made on behalf of the respective parties and taking into consideration the material on record restored the penalty order on the following reasons: "We have carefully considered the rival contentions as also the var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded on the date of search. "The only explanation lies in the fact that the amount had not been so deposited with him and the story that it has been so deposited has been made up subsequently in consultation with the alleged depositors. While analysing the evidence we have to keep in mind that as per the explanation which is being offered by the assessee, three depositors, S/Shri Satya Pal Bhatia Raghubir Singh and Shiv Gopal Gupta, had made deposits in December 1, 1976, i.e., three days before the search took place at the residential premises of the assessee and the fourth depositor, namely, Shri Sita Ram Gupta, had deposited the amount on December 3, 1976, i.e., only a day earlier before the search. In the circumstances, if the deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 10,000. He is an assistant to an advocate on a monthly salary of Rs. 250. Besides he also claims annual earnings around Rs. 3,000 by part time accounting work. Shri Sita Ram Gupta claims to have deposited Rs. 8,000. He is a retailer in Hawan Samagri. He is maintaining a bank account but the deposit like his son, Shiv Gopal Gupta, was not routed through banks and the amount is said to have been advanced from the past savings." We have heard Sri Satish Mandhyan, learned counsel for the applicant, and Sri Shambhoo Chopra, learned standing counsel for the Revenue. Learned counsel for the applicant submitted that as the cash found at the time of search had been explained and the deposits given in the firm had been accepted in the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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