TMI Blog1978 (9) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... said Kedar Nath Agarwalla at the address of the latter as furnished by the assessee, by registered post, came back unserved with the postal remark " not known " The assessee's explanation was that Kedar Nath was a citizen of Pakistan, that he was then in Pakistan and had no source of income in India. The ITO held that the source and nature of the said cash credit had not been proved and, accordingly he treated the same as the assessee's income from undisclosed source and included the same in the assessment of the assessee's income. The said addition of Rs. 15,000 was confirmed by the AAC and the Income-tax Appellate Tribunal. The ITO also initiated proceedings for imposition of penalty under s. 271(1)(c) of the I.T. Act, 1961, and as it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee the revenue had failed to discharge the onus of proving that the said cash credit appearing in his accounts represented nothing but the concealed income of the assessee and, therefore, the penalty proceedings were not sustainable. The decision of the Supreme Court in Anwar Ali's case [1970] 76 ITR 696 was cited and relied on. It was contended on behalf of the revenue, inter alia, that the assessee had furnished no evidence to prove the nature Of the credit and that the letters written by one Kedar Nath Huzarilal from Kusthia, in Pakistan, did not state that any amount was at all lent to the assessee. Even the identity of the alleged creditor remained unproved. It was also contended that there was justification for making an addition in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posing penalty and allowed the appeal. On an application of the Commissioner, West Bengal III, Calcutta, under s. 256(2) of the I.T. Act, 1961, this court directed the Tribunal to draw up a statement of case and refer the following questions for the opinion of this court as questions of law arising from the order of the Tribunal "Whether, on the facts and in the circumstance of the case and in view of the Explanation to section 271(1) of the Income-tax Act, 1961, the Tribunal was right in cancelling the order imposing penalty ? " To appreciate the controversy in the instant case it is necessary to refer to the Explanation to s. 271(1)(c) inserted by the Finance Act, 1964, with effect from the 1st April, 1964. The said Explanation is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d inaccurate particulars thereof. Learned counsel for the revenue contended that, in the instant case, it will be apparent from the order of assessment itself that the income which was returned by the assessee was less than 80% of the income on which he was taxed. Learned counsel, however, could not enlighten us from the records if the correct income of the assessee within the meaning of the said Explanation was determined and compared with the income as returned and if it was also determined whether the income as returned was less than eighty per cent. of the correct income. Learned counsel could not state if the assessee was called upon to prove or failed to prove, when so called upon to do, that he was not guilty of fraud or negligence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the Explanation could apply in the instant case and came to the conclusion that the Explanation could not be so applied. It remains to be decided whether the Tribunal should be directed to initiate a further enquiry on the basis of the Explanation to s. 271(1)(c). Normally, the jurisdiction of the High Court in a reference is merely advisory. If any material fact on record necessary to answer the question returned has not been included in the statement of the case the High Court may call for a supplementary statement : Vide Rajkumar Mills Ltd. v. CIT [1955] 28 ITR 184 (SC), Keshav Mills Co. Ltd. v. CIT [1965] 56 ITR 365 (SC) and C. P. Sarathy Mudaliar v. CIT [1966] 62 ITR 576 (SC). However, in certain cases, the Supreme Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions and the materials on record. The revenue did not adduce any further evidence before the Tribunal nor did it call upon the Tribunal to conduct any further enquiry to determine the applicability of the Explanation. It was not established before the Tribunal that all facts necessary for the applicability of the said Explanation were on record. Learned counsel for the revenue has drawn our attention to a decision of this court in CIT v. W. J. Walker and Co. [1979] 117 ITR 690 and contended in identical circumstances, the court in that case declined to answer the question and directed the Tribunal to determine the question in accordance with law. In our view, the said decision can be distinguished from the instant case on facts. In tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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