D. K. KAPUR J. - The questions referred to us in this reference have already been set out in the judgment in I.T.R. No. 217 of 1975 (supra p. 339). For convenience, they are repeated again. They are as follows :
'(1) Whether, on the facts and in the circumstances of the case, the levy of penalty under section 271(1)(c) of the Income-tax Act, 1961, was justified
(2) If the answer to the aforesaid question is in the affirmative, whether, on the facts and in the circumstances of the case, while levying penalty, the tax sought to be evaded is to be calculated by including in the income returned the amounts shown in Part F of the return
(3) Whether, on the facts and in the circumstances of the case, for calculation of penalty, the item of Rs. 3,78,329 has to be disregarded as being income not liable to be returned
(4) Whether, on the facts and. in the circumstances of the case, for purpose of calculation of penalty, assessed income has to be modified by making suitable adjustment in the value of the closing stock consequent upon disallowance of a portion of the purchase price ?'
This reference relates to the penalty aspect of the same assessment year 1962-63, which has been dealt with in the judgment in I.T.R. No. 217 of 1975 (supra p. 339) decided today. A penalty of Rs. 2,50,000 was levied by the Inspecting Assistant Commissioner of Income-tax under section 271(1)(c) of the Income-tax Act, 1961, in relation to three items, viz. Rs. 2,51,039, relating to the purchase of land in village Majeshwar, a profit of Rs 3,76,490 treated as the assesseds profit and Rs. 10,402 relating to the purchase of other land through four parties, Shri Kartar Singh, Shri A.D. Gupta, Shri K.P. Singh and Shri S.K. Burman.
We have on the merit dealt with the sum of Rs. 2,51,039, in our answers to questions Nos. (1) and (2). This is the amount received by Raisina amounting to Rs. 2,10,000 and the sum of Rs. 41,039.67 received by Shri Sham Singh, Shri Surjit Sigh and Shri Rajinder Singh. We have held that this amount is not the assesseds income. Similarly, we have held that the profit of Raisina is not the profit of the assessed company and the sum of Rs. 10,402 paid to Shri A.D. Gupta, Shri Kartar Singh and Shri S.K. Burman is also not the assesseds income. So, we have answered the questions in favor of the assessed on merits. The penalty case does not, thereforee, survive all we have now to answer the questions as follows :
Question No. (1) is answered in the negative, in favor of the assessed and against the Department. Question No. (2) does not survive. Question No. (3) is also not immaterial and Question No. (4) does not survive. The reference is answered accordingly. As this case has not survived due to the answers on merits, we make no order as to costs.