1. This is an application under Section 256(2) of the Income-tax Act, 1961 read with Section 66(2) of the Income-tax Act, 1922 for a direction requiring the Income-tax Appellate Tribunal to state the case and refer the questions of law arising out of the order of the Tribunal dated 22-1-1965. The questions of which reference is sought are:--
'A. Whether, on the facts and circumstances of the case, the Appellate Tribunal was justified in cancelling the penalty levied under Section 28(1) (c) of the Income-tax Act, 1922?
B. Whether the finding in the assessment proceedings that the cash credit of Rs. 12,409/- represented the income of the respondent, was prima facie enough to establish the said amount as his income; and the respondent having adduced evidence and failed to establish his claim or any other possibility, the only inference possible is that he has either concealed his income or has furnished inaccurate particulars?
C. Whether positive evidence for 'concealment or furnishing of inaccurate particulars is necessary in all cases or whether such a conclusion can be arrived at even by way of fair inference from the material on record?'
2. The non-applicant assessee carries on sarafi business at Tal, district Ratlam. During the course of the assessment proceedings for the year 1960-61, the Income-tax Officer noticed a credit entry of Rs. 12,409/- in favour of one Hansraj Gokulji in the account books of the assessee. The entry related to the sale proceeds of 104 tolas of gold alleged to have been given to the assessee by the said Hansraj Gokulji for sale. The assessee was asked to lead evidence to prove the genuineness of the transaction.The non-applicant assessee examined Hansraj Gokulji, who denied the transaction totally. The Income-tax Officer, therefore, added the said sum of Rupees 12,409/- as income of the assessee from undisclosed sources. The order of the Income-tax Officer was affirmed by the Appellate Assistant Commissioner on appeal and, thereafter, by the Income-tax Appellate Tribunal on a further appeal.
3. The Income-tax Officer, in the meanwhile, had started proceedings for levying on the assessee penalty under Section 28(1) (c) of the Income-tax Act, 1922 and assessed him to a penalty of Rs. 8600/-. The Appellate Assistant Commissioner upheld the imposition of the penalty. On a further appeal to the Income-tax Appellate Tribunal, the imposition of the penalty was cancelled. The Tribunal said:
'While we ourselves have held that the assessee's explanation was not proved in regard to the source of the credits, there is nothing to bring home the charge of concealment or furnishing of inaccurate particulars on the assessee. Once the explanation of the assessee is out of the field, there is nothing positive to suggest that the credits were in the nature of income accruing to the assessee. While, therefore, the Department was fully justified in adding the amount as the assessee's income from undisclosed sources, there was no warrant for levying any penalty. The penalty will, therefore, be cancelled.'
4. The learned counsel for the Commissioner contends that the questions of Jaw aforesaid arise out of the order of the Tribunal, which the Tribunal may be directed to refer to this Court for decision,
5. It has been repeatedly held thatthe question whether there has been a concealment of income is a question of fact on which no reference is ordinarily permissible: (Kanga and Palkhivala's 'The Law and Practice of Income-tax', Sixth Edition, p. 1039).
6. But, that apart, the Revenue can point to no positive circumstance on the record from which an inference of concealment or deliberate furnishing of inaccurate particulars could reasonably arise; and, in the absence of such material, the Tribunal was correct in holding that there were no positive circumstances warranting the drawing of the necessary inference of concealment or of deliberate furnishing of inaccurate particulars to attract the provisions of Section 28(1) (c) of the Income-tax Act. 1922.
7. We may also add that in view of the decision of this Court in Commr. of Income-tax, M. P. v. Punjabhai Shah, : 67ITR337(MP) , the Tribunal was justified in not drawing the inference necessary to bring the case of the assessee within the mischief of Section 28(1) (c) of the Income-tax Act, 1922; and we see no reason to take a view different from the one taken there in regard to the penalty provisions contained in Section 28(1) (c) of the Act. 8. The application for reference is, therefore, rejected with costs. Counsel's fee Rs. 100/-.