1. By this reference under Section 256(1) of the I.T. Act, 1961, hereinafter referred to as 'the Act', the Income-tax Appellate Tribunal, Indore Bench, has referred the following questions of law to this court for its opinion :
'(1) Whether, on the facts and in the circumstances of the case, the assessee could be said to have concealed the particulars of his income for the A. Y. 1973-74 so as to be penalised under Section 271(1)(c) of the I.T. Act, 1961
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the levy of penalty of Rs. 4,500?'
2. The material facts giving rise to this reference, briefly, are as follows :
At the material time, the assessee carried on the business of 'adat'. For the assessment year 1973-74, while framing the assessment, tbe ITO found on the basis of actual inspection of stocks by the Food Department that there was discrepancy in the actual stock of wheat and rice and the stock disclosed by the books of account of the assessee. The ITO, therefore, made an addition of Rs. 5,000 in the wheat account and Rs. 4,500 in the rice account. Penalty proceedings were also initiated against the assessee. The ITO found in those proceedings on the basis of the material on record that the assessee was unable to explain the discrepancies in stocks. Penalty was accordingly levied by the ITO equal to the income concealed. On appeal, the AAC held that in respect of rice account, the assessee could not be held to have concealed particulars of his income and accordingly the amount of penalty was reduced to Rs. 5,000. On further appeal before the Tribunal, the order of the AAC was affirmed. Hence, at the instance of the assessee, the aforesaid questions of law have been referred to this court for its opinion.
3. Shri Mahajan, learned counsel for the assessee, contended that there was no application of mind by the Tribunal in coming to the conclusion that the assessee consciously concealed his income and that the findings in the assessment proceedings were adopted by the Tribunal in the penalty proceedings. The contention cannot be upheld. As observed by the Supreme Court in Anantharam Veerasinghaiah & Co. v. CIT : 123ITR457(SC) , the taxing authority is bound to consider in the penalty proceedings, the entire matter afresh on the material before it and the finding in the assessment proceedings cannot be regarded as conclusive for the purpose of penalty proceedings. In the instant case, the Tribunal appreciated the material on record afresh in the penalty proceedings and found that it was proved that there was unexplained excess of wheat stock, as found by the Food Department. The Tribunal further found that in the absence of any plausible explanation by the assesses, it must be held, in view of its aforesaid finding in the penalty proceedings, that there was conscious concealment of income by the assessee. The Tribunal thus arrived at its findings in the penalty proceedings independently of its findings in the assessment proceedings. In these circumstances, the Tribunal was justified in upholding the levy of penalty.
4. For all these reasons, our answers to the two questions referred to this court are in the affirmative and against the assessee. In the circumstances of the case, parties shall bear their own costs of this reference.