JUDGMENT
1. The following question was referred to this court for decision by the Income-tax Appellate Tribunal :
“Whether, on the facts and circumstances of the case, the Tribunal was justified in deleting the penalty of Rs. 10,700 imposed by the Inspecting Assistant Commissioner under Section 271(1)(c) of the Income-tax Act, 1961 ?”
2. The relevant facts in the case are that while scrutinising the income-tax return of the opposite party company, the Income-tax Officer was of the view that a sum of Rs. 20,000 was concealed by the assessee as the source of cash deposit to that extent was not satisfactorily proved by it. The Income-tax Officer assessed the total income of the opposite party at Rs. 64,480 and commenced penalty proceedings under Section 271 of the Income-tax Act. The matter was referred for disposal to the Inspecting Assistant Commissioner who held against the assessee and imposed a penalty of Rs. 10,700. The assessee appealed. It had also appealed against the order of assessment of its income. The case of the assessee in regard to the inclusion of Rs. 20,000 in its income was accepted by the Tribunal and following this decision, the Tribunal stated that the order of penalty was not sustainable as it rested on the order of assessment of income.
3. With respect to the first order of the Tribunal, the Department came to this court and got the following question referred :
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in deleting the addition of Rs. 20,000 as the assessee’s income from undisclosed sources and in allowing the interest claim of
Rs. 1,318 on the same? ”
4. The case was registered as Tax Case No. 95 of 1973. It has been finally decided on 23rd April, 1984, and the High Court has given its opinion against the Department (Addl. CIT v. Bahri Bros. P. Ltd.–[1985] 154 ITR 244 (Pat)). The Tribunal was right in the present case in holding that since the penalty imposed was based on the earlier assessment order, the second proceeding also must be decided in favour of the assessee.
5. Mr. Sharan, appearing on behalf of the petitioner, fairly conceded that he cannot now urge otherwise.
6. For the reasons mentioned above, the question is decided in the affirmative, i.e., against the Department.