M. C. DESAI C.J. - The Income-tax Appellate Tribunal (Delhi Bench 'B') has at the assessees instance submitted to this court a statement of the case giving rise to the following questions of law :
'1. Whether there was any evidence to support the finding that the assessee was guilty of concealing the particulars of his income within the meaning of section 28(1)(c) of the Indian Income-tax Act
2. Whether, on the facts and circumstances of the case, the imposition of the penalty was justified in law ?'
The facts as they appear from the statement are these. The assessee is a registered firm consisting of three partners, one being Haji Abdul Qayum. It submitted a return of its income for the assessment year 1948-49; during the assessment proceedings the income-tax Officer came across an entry of Rs. 76,047-8-0 in the personal account of Haji Abdul Qayum, partner. The assessee was called upon to explain how this amount was deposited in the personal account of the partner and the explanation offered was that he and nine other persons had an intention of migrating to Pakistan, that they wanted a bank draft to be sent to Pakistan, that the nine persons had deposited a sum of Rs. 48,000 in the draft, that the partner added Rs. 28,000 of his own money and obtained a draft from the bank for Rs. 76,000, that subsequently all the ten persons abandoned the idea of migrating to Pakistan and that the amount of the draft was recovered from the bank and was deposited in the personal account of the partner. The Income-tax Officer made a thorough inquiry into the correctness of this explanation and came to the finding that the explanation was not proved. He observed :
'The assessee has failed to prove that the sum of Rs. 48,000... did in fact come from the parties stated above... This money obviously came from some other source. There can be several sources form which it could have come but the actual source... is only within the assessees special knowledge. He has, however, refused to disclose the source by giving an obviously unproved story about it. Natural inference is that the disclosure of the correct source would make it liable to tax. In this view of the case, I treat the sum of Rs. 48,000 as income from undisclosed sources and a notice under section 23(3) should be issued for its concealment.'
When assessing the income he treated the sum of Rs. 48,000, 'income from undisclosed sources' as discussed above, and passed the assessment order. The Appellate Assistant Commissioner confirmed the assessment order, observing that 'the appellant having attempted to mislead him and having given a false version to establish the receipts of these sums from other parties, the Income-tax Officer was perfectly entitled to presume these credits to be revenue receipts of the appellant from some undisclosed sources.' The Tribunal confirmed the order of the Appellate Assistant Commissioner. Then proceedings under section 28(1)(c) were started against the assessee. The assessee appeared and simply repeated the explanation offered in the assessment proceedings for the entry of Rs. 76,000 and odd. It did not produce any further material before the assessing authority. The assessing authority then passes an order imposing a penalty of Rs. 10,000 under section 28(1)(c) observing :
'The only natural inference in the circumstances was that the money represented concealed income. It is therefore established that the assessee had concealed income... In his explanation dated April 15,1950, the assessee has only urged his innocence about these deposits. No evidence has been produced to show that the amount was not a revenue receipt.'
The penalty order was confirmed by the Appellate Assistant Commissioner; it was confirmed by the Tribunal after reducing the amount of the penalty of Rs. 5,000. The assessee then applied to the Tribunal under section 66(1) for referring to this court certain questions of law arising out of its order. The Tribunal refused and then this court under section 66(2) ordered the above-mentioned questions to be referred to it.
Question No. 1 simply is whether there was any material that could support the finding that the assessee had concealed it income. The penalty order is based upon the finding arrived at in the course of assessment proceedings that the amount of Rs. 48,000 was the assessees income from undisclosed sources. It was not disclosed in the return. When it was income and was not disclosed in the return it means that it was concealed. This finding arrived at in the assessment proceedings that it was undisclosed income of the assessee was a material sufficient to support the finding to be reached in the penalty proceedings that this income had been concealed. We do not mean to say that this material was conclusive or was not capable of being rebutted and are also not called upon to appraise its value through question No. 1. All that we are called upon to answer is whether there was any material that could sustain the finding of concealment of income and our answer must clearly be in the affirmative. It was not disputed that a finding reached in the assessment proceedings about a certain receipt being income is relevant fact and once it is admitted the question stands answered. Our answer to question No. 1. is, therefore, in the affirmative.
Question No. 2 is hardly a question of law. If there was material which could justify the finding of concealment of income, whether the finding should be recorded or not on the basis of that material becomes a question for the discretion of the Tribunal, e.g., a question of fact and not of law. Whether a piece of evidence that can support a finding exists or not is a question of law; whether it should be believed or not or whether it should be acted upon or not is a matter of discretion or fact for the judge. If there was material which could justify the finding that the assessee had concealed its income the question whether in the particular circumstances of the case that finding should have been recorded or not is not a question of law at all. Any question relating to appraisement of evidence is not question of law; therefore, question No. 2 as framed is not a question of law. If it were treated as a question of law the only possible answer that could be given is that the penalty order could be based on the material. As we have found in answering question No.1 that there was material which could sustain the finding of concealment of income, it follows that on that material the finding of concealment of income could be given.
A number of questions not involved in either of the two questions were raised before us. It was contended that the order imposing penalty was passed simply on the basis of the finding recorded in the assessment proceeding that it was concealed income. No other material was placed before the assessing authority in the penalty proceedings, which means that there was no rebuttal of the evidence furnished by the finding about the receipt being income. When there was no rebuttal the assessing authority could record the finding of concealment. Another question was that it was not proved that the concealment was deliberate but section 28(1)(c) does not require the concealment to be deliberate. There is difference between concealing income and giving inaccurate particulars of income and it is only in the latter case that the element of deliberateness is required. Concealment is proved when it is proved that there was income and that it was not disclosed in the return as in the instant case. Sri S. D. Agarwal relied upon Hariram Sait v. Commissioner of Income-tax, but the fact in that case were essentially different from those of the instant case. There accounts were maintained by the father of Hari Ram and karta of the Hindu undivided family, which was the assessee, the return was filed by Hari Ram and karta of the Hindu undivided family, which was the assessee, the return was filed by Hari Ram, who was minor, through his guardian after the death of his father and his explanation that he did not know that there was any incorrect entry in the accounts and, therefore, could be held to have concealed income from the return was accepted. Here the accounts were maintained by the assessee and it could not plead that it did not know the real nature of the entry of Rs. 76,000 standing to the credit of Haji Abdul Qayum. Sri S. D. Agarwal also relied upon a decision of this court in Lal Chand Gopal Das v. Commissioner of Income-tax but the observations made therein go against his contentions; it does not at all support him. In the result our answer to question No. 2, if it must be answered, is in the affirmative.
We direct that a copy of the this judgment shall be sent under the seal of the court and the signature of the Registrar to the Income-tax Appellate Tribunal. We further direct that the assessee shall pay to the Commissioner of Income-tax his costs of this reference, which we assess at Rs. 200. Counsels fee is assessed at Rs. 200.