Suhas Chandra Sen, J.
1. The following question of law has been referred by the Tribunal to this court under Section 256(1) of the I.T. Act, 1961:
'Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the impositionof penalty of Rs. 25,000 under Section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 1970-71 was justified ?'
2. The assessee is an individual who had shown income from commission, share of profits and director's remuneration. The assessee filed the return of income for the assessment year 1970-71 declaring an income of Rs. 34,250. During the course of assessment proceedings the ITO found that Shri Bhupen Mehta and Shri Mukesh Mehta, the minor sons of the assessee, filed returns of income for the assessment year 1970-71 showing income from share dealings and share speculation. The income in the case of Shri Bhupen Mehta, as per profit and loss account, was Rs. 10,340 and that of Shri Mukesh Mehta, Rs. 12,574. The ITO on the basis of evidence came to conclusion that these school-going minor children could not appreciate the technicalities and intricacies of business, particularly the share dealing and share speculation. He, accordingly, added these two amounts in the hands of the assessee and also initiated penalty proceedings under Section 271(1)(c) of the Act. Since, however, the minimum penalty imposable exceeded the prescribed limit, he referred the matter to the IAC for the imposition of penalty. The IAC issued a show-cause notice but the asses-sec pleaded that since there was no mens rea in not showing the income in the hands of the assessee, there was no question of levying the penalty. The IAC, however, did not agree with the assessee and levied a penalty of Rs. 25,000.
3. Aggrieved by this order, the assessee filed an appeal before the Income-tax Appellate Tribunal. It was contended that in view of the judgment of the Supreme Court in C1T v. Anwar Ali : 76ITR696(SC) and the judgment of the Madras High Court in N. Annamalai v. CIT : 73ITR809(Mad) , no penalty could be levied on the, assessee. The assessee, as a matter of fact, relied upon a number of judgments of the judicial authorities in support of the fact that no penalty could be levied under such circumstances.
4. The learned departmental representative, on the other hand, contended that the minor sons of the assessee were not mature enough to understand the implications of such highly complicated business of share dealing or share speculation. If the entirety of circumstances should be taken into account, then the IAC was justified in levying the penalty. He also placed his reliance on the judgment of the Supreme Court in CIT v. Durga Prasad More : 82ITR540(SC) , wherein it has been held that the courts and the tribunals have to judge the evidence before them by applying the test of human probabilities.
5. The Income-tax Appellate Tribunal considered the facts of the case and came to the conclusion that the minor sons were incapable of carrying on the specialized type of business. This, requires intricate knowledge of business dealings and since the school-going boys could not understand the implications of the highly complicated business, it was the asses-see who was really carrying on the business in the names of these two minors. These two minor children were, therefore, the benamidars of the assessee. The Tribunal, therefore, confirmed the order of the IAC in levying the penalty of Rs. 25,000.
6. The assessee made an application to the Tribunal for referring thequestions as follows :
'1. Whether, on the facts and in the circumstances of the-case, the income-tax authorities were justified in imposing penalty under Section 271(1)(c) of the Income-tax Act, 1961 ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in affirming the imposition of penalty under Section 271(1)(c) of the Income-tax Act, 1961 ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the imposition of penalty under Section 271(1)(c) of the Income-tax Act, 1961, was justified ?'
7. The Tribunal, however, reframed the question raised by the assessee and has referred the question which we have set out hereinbefore.
8. It has been contended on behalf of the assessee before us that in this case the return of income was filed on 30th April, 1971, and the assessment order was passed on 14th March, 1973. The IAC passed an order of penalty on reference of the matter by the 1TO. It has been argued that the ITO could, after 1st April, 1971, refer the case to the IAC only if the amount of concealment exceeded Rs. 25,000. It has been argued that in this case it will be clear from the dates given above that the initiation of proceedings for the imposition of penalty must have taken place after 31st March, 1971, when the change in law took place. It is contended that in view of the changed law and the amendment to Section 271(1)(c), the entire proceedings for imposition of penalty by the IAC was misconceived and, therefore, the order of the 'Tribunal should be set aside. Reliance has also been placed on the case of CIT v. Mela Ram Jagdish Raj & Co. , for the proposition that if the concealment was below Rs. 25,000, penalty could not be imposed by the IAC after the amendment of Section 271(1)(c) read with Section 274(2).
9. It has also been argued that even though this point was not canvassed before the Tribunal, the question that was now sought to be raised is only an aspect of the question that has been referred to this court. The question is broad enough for the assessee to urge this point and in view of the decision of the Supreme Court in the case of CIT v. Scindia Steam Navigation Co. Lid. : 42ITR589(SC) , it was competent for the court to go into this question and answer the reference accordingly.
10. In this case, in the assessment order for the assessment year 1970-71, it was recorded that a return was filed on 30th April, 1971, showing income of Rs. 34,250. The total income was assessed under Section 143(3) at Rs. 63,300. It was also recorded that penalty proceedings had already been initiated under Section 271(1)(a) and under Section 271(1)(c). The only point that was canvassed before the IAC was that, in the facts of this case, two minors whose income was added to the income of the assessee, had nothing to do with the business of the assessee and they were independent assessees and there was no question of any benamidar. Relying on the decisions in the case of CIT v. Anwar Ali : 76ITR696(SC) and in the case of CIT v. Khoday Eswarsa and Sons : 83ITR369(SC) , it was argued that the Revenue had not discharged the onus of proving concealment of income in the facts and circumstances of this case. This argument was not accepted by the IAC. The Tribunal also affirmed the decision of the IAC.
11. Before the Tribunal, the assessee did not advance any other argument. The argument was confined to the legal point that the minors' income could not be linked up with the income of the assessee as the assessee was not doing any benami business in the name of the minors. The Tribunal negatived the contention and held that the assessee was doing business in the name of the minors and, as such, there was concealment of income and the penalty was properly levied by the IAC under the law.
12. The argument that has been advanced before us relates to the procedure for imposition of penalty. This argument was not advanced before the Tribunal and the Tribunal did not have the occasion to consider this aspect of the matter, and the facts involved in the case were not also investigated. A return of income was filed showing the income of Rs. 34,250. The assessment was completed at a total sum of Rs. 63,300. The ITO noted in the assessment order that penalty proceedings had already been initiated under Sections 271(1)(a) and 271(1)(c). Therefore, it is not possible to say at this stage that the ITO had only a sum of Rs. 22,914 in his mind when he initiated the penalty proceedings.
13. Section 274(2) at the material time stood as under :
'274(2). Notwithstanding anything contained in Clause (iii) of subsection (1) of Section 271, if in a case falling under Clause (c) of that subsection, the amount of income (as determined by the Income-tax Officer on assessment) in respect of which the particulars have been concealed or inaccurate particulars have been furnished exceeds a sum of twenty-five thousand rupees, the Income-tax Officer shall refer the case to the Inspecting Assistant Commissioner who shall, for the purpose, have all the powers conferred under this chapter for the imposition of penalty.'
14. In this case the ITO had added back more than Rs. 29,000 to the income disclosed by the assessee in his return. On the face of the records it does not appear that the ITO did not have jurisdiction to refer the case to the IAC or that the IAC did not have jurisdiction to go into the question of penalty in this case. It .was for the assessee to raise his contention before the IAC that the ITO had a concealment of less than Rs. 25,000 in his mind when his case was referred to the IAC That contention, however, was not raised either before the IAC or before the Tribunal.
15. It has been contended on behalf of the assessee that it is merely another aspect of the same question. In our opinion, the reliance placed in the case of CIT v. Scindia, Steam Navigation Co. Ltd, : 42ITR589(SC) , in support of this proposition is misconceived. It was categorically stated in that case that when a question of law was neither raised before the Tribunal nor considered by it, it would not be a question arising out of its order notwithstanding that it might arise on the finding given by it. In the case of CIT v, Scindia Steam Navigation Co. Ltd. : 42ITR589(SC) , a deduction was claimed under Section 10(2)(vii) of the Indian I.T. Act, 1922. The deduction was not allowed on the ground that the liability of the company to tax fell to be determined on April 1, 1946, when the Finance Act, 1946, came into force. The question that was sought to be argued was that the proviso to Section 10(2)(vii) had come into operation in the year in question and because of that proviso the assessee was entitled to deduction in spite of the finding made by the Tribunal. In the context of those facts the Supreme Court observed that the question that the assessee raised was merely one aspect of the entire question that was already there before the Tribunal. But in this case the question that is now sought to be raised is not another aspect of the question that was considered by the Tribunal.
16. Before the Tribunal the only question was whether there was any concealment of income or not. The question sought to be raised before us is about the proper procedure for the imposition of penalty. This question was neither raised nor considered by the Tribunal. The Tribunal was not called upon to consider the scope and effect of the amendment to Section 271 and Section 274 of the I.T. Act, 1961. The facts necessary for answering this question was also not investigated by the Tribunal. In our view, this question does not arise out of the order of the Tribunal at all.
17. In the case of CGT v. Smt. Kusumben D. Mahadevia : 122ITR38(SC) , the only contention before the Tribunal was as to which method should bo followed for valuing the shares of a company in that case. The Revenue contended that in the case of an investment company, the proper method of valuation would be to take the mean of two values, one arrived at by applying the profit-earning method and the other by applying the break-up method ; the assessee pleaded for adopting only the profit-earning method, since, in their submission, that was the only method which could be applied for the valuation of the shares of a going concern. The Tribunal accepted the contention of the assessee and valued the shares by applying the profit-earning method. An application was made for referring a question of law to the High Court by the Revenue, The application, however, was rejected by the High Court. There was a further appeal to the Supreme Court where it was argued that the articles of association of the company in question contained a restrictive provision as to the alienation of shares, and, therefore, Rule 10, Sub-rule 2 of the G.T. Rules should have been followed. It was argued that the break-up method was the primary method to be applied for arriving at the valuation of the shares and, in the circumstances, the Tribunal was wrong in determining the value of the shares by applying the profit-earning method. The Supreme Court rejected the said argument and observed as follows (p. 48 of 122 ITR):
'Now, it is difficult to see how the question whether the valuation of the shares should have been made on the basis of the break-up method by reason of Rule 10, Sub-rule (2) of the G.T, Rules, can be required to be referred by the Tribunal to the High Court. It is well settled that no question can be referred to the High Court unless it arises out of the order of the Tribunal and, as pointed out by this court in CIT v. Scindia Steam Navigation Co. Ltd. : 42ITR589(SC) , a question of law can be said to arise out of the order of the Tribunal only if it is dealt with by the Tribunal or is raised before though not decided by the Tribunal and a question of law not raised before the Tribunal and not dealt with, by it in its order cannot be said to arise out of its order, even if on the facts of the case stated in the order the question fairly arises. It is obvious that this question sought to be raised on behalf of the Revenue was neither raised before the Tribunal nor decided by it and the only argument advanced before the Tribunal was that the mean of the values arrived at on an application of the profit-earning method and the break-up method should be taken to be the value of the shares. There was no argument addressed to the Tribunal that the breakup method should be adopted because that was the primary method prescribed by Rule 10, Sub-rule (2), and the Tribunal had, therefore, no occasion to deal with such argument. This question obviously, therefore, does not arise out of the orders of the Tribunal and it cannot bo required to be referred to the High Court.'
18. In view of the principle laid down by the Supreme Court in the aforesaid case, in our opinion, the assessee is not entitled to raise any argument on the correct procedure for the levy of penalty and also the jurisdiction of the IAC in this matter. The Tribunal did not have any occasion to go into this question and, therefore, this is not a question of law arising out of the order of the Tribunal.
19. Even within the framework of the question referred to us, the asses-see is no't competent to raise this contention. The question before us is whether, in the facts and circumstances of the case, the Appellate Tribunal was justified in holding that the imposition of penalty for the assessment year 1970-71 was justified. The case that was made out before the Tribunal was that there was no concealment. The Tribunal, after reviewing all the facts, came to the conclusion that there was concealment. There was no other argument made before the Tribunal. In the facts and circumstances of the case before it, the Tribunal was right in holding that the imposition of penalty of Rs. 25,000 under Section 271(1)(c) of the I.T. Act, 1961, for the assessment year 1970-71 was justified. This question is, therefore, answered in the affirmative and in favour of the Revenue.
20. In the facts and circumstances of the case, the parties will pay and bear their own costs.
Sabyasachi Mukharji, J.
21. I agree.