TMI Blog1984 (8) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... 966, the assessees purchased a "grape garden" at Hyderabad for Rs. 2,95,000. The consideration was paid by drawing monies from the firm, the National Cashew Company, of which the assessees are partners. From the " grape garden ", the assessees, for the year in question, had made a profit of Rs. 4,94,137. The assessees are entitled to equal shares in the said profit. The assessees, however, had not included this receipt in the returns they had furnished for the year in question on the ground that this profit represented only agricultural income. The Income-tax Officer accepted the returns and made the assessments. The assessment of Mohandas Rajan, one of the respondent-assessees, for the year in question, was reopened and in the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the Tribunal. The Tribunal, however, referred only the above question to this court. That is how the Revenue is before us. Before the Tribunal, counsel for the assessees raised the following ground as the first ground : " The first ground urged by Shri Panicker and which goes to the root of the levy of penalty is this. The grape garden has been purchased by the Trivandrum firm utilising its own funds." After hearing the arguments on this point, the Tribunal has found: " Though it is a fact that the 'grape garden' was purchased by monies drawn from the firm, that does not mean that the grape garden is an asset of the firm and its income is of the firm. Monies had been drawn on behalf of all the partners under the Hyderabad acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he responsibility should fall upon the firm and not upon the assessees. Hence, the reopening of the income-tax assessment is not justified." The Inspecting Assistant Commissioner, however, was not prepared to accept this contention. Dealing with this aspect, the Inspecting Assistant Commissioner held thus: " There has been no such claim raised in the past during the course of any proceedings in this case. Apart from that, there is a factual finding on the matter in the Tribunal's order. This order of the Tribunal was passed in the appeals filed by the assessees against the order of reassessment. The assessee, along with five others, has purchased on November 10, 1976, a grape garden near Hyderabad for a total consideration of Rs. 2,90,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat claim has been found to be false. So it is income only. The Department has not used falsity of explanation to prove the character of a receipt which was otherwise not income. It is income alright, even according to the assessees". The Tribunal, however, did not determine the quantum of concealed income and thus left open the question relating to quantification of penalty because, according to the Tribunal, the concealment of income is not attributable to the assessees but only to the firm which is a distinct legal entity for the purpose of assessment under the Income-tax Act, 1961. Counsel for the Revenue submitted that in the light of the finding that the " grape garden " is not an asset of the Trivandrum firm and in view of the defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement of the case is enough to reject the above submission of counsel for the assessees. In paragraph 17, the Tribunal has stated : " Question No. 3 is the consequence of the finding that the assessees were partners. The question by itself does not stand. It is implied in question No. 2. Since we are referring question No. 2, no separate reference of question No. 3 is necessary, and question No. 3 is as follows : " Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that 'as far as such assessee was concerned he has shown the share allocation by the firm and if there is any concealment, the firm had concealed and the firm should be penalised'; He has correctly shown the shar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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