ORDER
G. G. Sohani, J. – By a reference, Misc. Civil Case No. 74 of 1979, under s. 256(1) of the IT Act, 1961 (hereinafter referred to as “the Act”), the Income Tax Appellate Tribunal, Indore Bench referred the following two question of law to this Court for its opinion :
“(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the IAC has the jurisdiction to levy penalty under s. 271(1)(c) of the Act, 1961 especially in view of the IT Act, 1961, with effect from 1-4-1976 ?
(2) Whether, on the facts and in the circumstances of the case, the levy of penalty under s. 271(1)(c) was valid ?”
When that reference came up for hearing before a Division Bench of this Court, the Court, by its order dt. 27-3-1981, directed the Tribunal to send a supplementary statement of case and state therein the date on which the matter regarding imposition of penalty was referred by the ITO to the IAC. In pursuance of that direction, the Tribunal has now sent a supplementary statement of the case. The Tribunal has stated that the ITO had made a reference to the IAC on 22-4-1975 for imposition of penalty under s. 271(1)(c) of the Act, in accordance with the provisions of s. 274(2) of the Act as it stood prior to 1-4-1976 when that provisions was deleted by the Taxation Laws (Amendment) Act. 1975. The Tribunal has also stated that there is no proforma prescribed under s. 274(2) of the Act. In view of the stated in the supplementary statement of the case, it must be held, following a Division Bench decision of this Court in CIT, M.P. v. A. N. Tiwari (1980) 124 ITR 680 (MP), that as the reference was made to the IAC under s. 274(2) of the Act in accordance with s. 274(2) of the Act, as it stood at the time of making the reference the reference would not be invalidated by the subsequent amendment deleting s. 274(2) from 1-4-1976. Shri Choudhary, the ld. counsel for the assessee, however, contended that no valid reference was made by the ITO prior to 1-4-1976. The contention was that what was sent by the ITO to the IAC on 22-4-1975 was merely a report, which was not accompanied by the relevant record. It is, therefore, necessary to deal with the contention as to whether the reference made by the ITO to the IAC on 22-4-1975 was a valid reference.
2. Now the facts that the ITO, who made the reference, was competent to make the reference and the IAC, who received the reference, was competent to receive the same, have not been disputed. It is also not disputed that the Rules do not prescribe any form, in which a reference is required to be made under s. 274(2) of the Act. Annexure B is the report made by the ITO to the IAC on 2-4-1975 and the heading of that report discloses that it is a case recommended for penalty under s. 271(1)(c) of the Act for concealment of income by the assessee. In that report, detailed factual information for initiating proceedings for imposition of penalty has been furnished. The ld. counsel for the assessee, however, contended that the ITO was obliged under s. 274(2) of the Act to send the entire record of the case to the IAC to enable him to decide the matter relating to imposition of penalty. There cannot be any dispute that the IAC should have before him the relevant record before he proceeds to pass an order imposing penalty, but the date of sending the record or any further information to the IAC will not be decisive of the question as to the date when the reference was made. That will depend upon the date when the ITO, who has jurisdiction, had moved the IAC having jurisdiction, to initiate proceedings against an assessee for imposition of penalty under s. 274(2) of the Act. In the instant case, the ITO had referred the matter to the IAC on 22-4-1975. In the circumstances it cannot be held that there was no valid reference made by the ITO to the IAC prior to 1-4-1976. In this view of the matter, the Tribunal in our opinion, was justified in law in holding that the IAC had jurisdiction to levy the penalty.
3. As regards the second question referred to this Court, the Tribunal has found that the business carried on in the name of M/s. Gopal Agencies was a benami business of the assessee. The relevant finding of the Tribunal, as recorded in the order forming part of the record of Misc. Civil Case No. 74 of 1979, is as follows :
“On merits, the ld. counsel of the assessee has reiterated the contention that the business in the name of M/s. Gopal Agencies was carried on by Shri Gopaldas himself and the assessee firm and nothing to do with the said business. In this connection, reliance was placed on the statement of Shri Jawaharlal, partner, recorded by the Income Tax Officer and also the affidavit of Shri Gopaldas. It was contended that on the facts and circumstances of the case, the business done by Shri Gopaldas should not have been firm and consequently, there was no charge of concealment against the assessee.
We have already discussed at length the facts of the case while dealing with the addition made towards the total income of the assessee in respect of the business done in the name of M/s. Gopal Agencies and we have clearly held that the said business was actually carried on by the assessee firm. In view of our finding that the said business was the benami business of the assessee, the charge of concealment of the income from the said business has been clearly established against the assessee. From the facts stated in the earlier part of this order while dealing with the income from M/s. Gopal Agencies, it is obvious that the assessee set up a device to divert a part of the income and thereby a clear attempt has been made to conceal the particulars of its income. We, therefore, hold that penalty under s. 271(1)(c) is leviable in this case. However, since the amount of addition from business in the name of M/s. Gopal Agencies has been reduced to Rs. 10,000 we reduced the amount of penalty to a sum of Rs. 10,000.”
In view of the aforesaid finding by the Tribunal, it cannot be held, as urged on behalf of the assessee, that the Revenue had not discharged the burden to prove that there was concealment of income by the assessee. The Tribunal, in our opinion, was justified in holding that the levy or penalty was valid.
4. Our answer to the two question referred to this Court are, therefore, in the affirmative and against the assessee. In the circumstances of the case, parties shall bear their own costs of this reference.