C. S. P. SINGH J. - In pursuance of directions issued by this court, the Income-tax Appellate Tribunal, Delhi Bench 'A' has referred the following two questions for the opinion of this court :
'1. Whether, on the facts and in the circumstances of the case, the assessment for the year 1950-51 made on February 28, 1959, was barred by time ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that there was no concealment of income in this case ?'
The assessee is an individual and earns income by way of salary and commission. In the assessment year 1950-51, with which we are concerned, the Income-tax Officer sought sanction from the Commissioner of Income-tax for initiating proceedings under section 34 of the Indian Income-tax Act, 1922 (hereinafter referred to as the Act). Before that sanction was received, the assessee on January 4, 1955, filed a return of income under section 23(3) of the Act. The return was dated 30th December, 1954. The sanction was received on 15th January, 1955, and, thereafter, notice under section 34 of the Act was issued. A statement was made by counsel that the return be treated as one under section 34(1)(a) of the Act. The Income-tax Officer initiated proceedings calling upon the assessee to explain the nature of the receipt of Rs. 1 lakh received by him on or about 24th July, 1949, from her Highness Maharani Gambhir Kumari of Nepal. On 20th September, 1955, the assessment was completed and the amount of Rs. 1 lakh was included as the assessees income. Appeal filed before the Appellate Assistant Commissioner of Income-tax failed, but, on further appeal to the Tribunal, it was held that action under section 34(1)(a) was invalid. On merits, however, it was held that the amount of Rs. 1 lakh received by the assessee was taxable. The order of the Tribunal was up-held on reference to this court by order dated April 6, 1960. Thereafter, the Income-tax Officer proceeded to make assessment on the basis of original return. The assessee prayed for an adjournment which was refused and on February 23, 1959, an assessment was made under section 23(4) of the assessment order was annulled on the ground that it was passed after a period of 4 years. Penalty proceedings had also been initiated, but on August 28, 1959, the Income-tax Officer dropped the proceedings under section 28(1)(c) of the Act which were initiated by notice under section 28(3) on September 20, 1955. The department thereafter filed an appeal to the Tribunal. The Tribunal upheld the findings of the Appellate Assistant Commissioner that the assessment was time-barred, that the assessee had disclosed all the material facts for making the assessment and the only suppression that the assessee had made was in respect of an amount of Rs. 12. It also held that there was not concealment of the amount of Rs. 1 lakh as the item was of a doubtful nature and there could be an hones difference of opinion as to whether the amount was received by was of gift or constituted the income of the assessee.
The time for making an assessment in the circumstances of the present case, in view of section 34(3), would have stood extended only in case the matter fell within section 28(1)(c) of the Act. It has been seen that the Income-tax Officer dropped the penalty proceedings and the Tribunal has further held that there was no concealment by the assessee. In this view of the matter, the Tribunal was right in holding that the period for making the assessment had run out. The finding that there was no concealment has been recorded by the Tribunal after considering the relevant materials and the counsel for the department has failed to point out to us any irrelevant material considered by the Tribunal which would vitiate its finding.
We accordingly answer both the questions in the affirmative, against the department and in favour of the assessee. The assessee is entitled to its costs. Counsels fee is assessed at Rs. 200.