ORDER
A.M. Sapre, J.
This is an income-tax reference made under section 256(1) of the Income Tax Act by the Tribunal at the instance of assessee in WA, No. 71 /Ind./96 which in turn arise out of I.T.A. No. 998/Ind./91 to answer following questions of law said to arise out of the order of the Tribunal :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the penalty notice issued to the assessee was proper and the penalty proceedings initiated thereon were legal and no blanket proceedings were initiated against the assessee?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that legal requirement of satisfaction is of only the prima facie satisfaction of the assessing officer. In respect of’ concealment of income of furnishing inaccurate particulars of income before issuing notice under section 271(1)(c) of the Act?”
2. In substance, the question that arise for consideration in this reference is – Whether initiation of penalty proceedings by assessing officer against an assessee under section 271(1)(c) of the Income Tax Act for the year in question in respect of concealment of income of furnishing inaccurate particulars of their income are sustainable, as has been held to be so?
3. The dispute arises for the assessment year 1976-77. The assessee is engaged in the business of manufacture and sale of electrodes at Indore. There was a search operation carried out under section 132(1) of the Act in the business and residential premises of assessee in September, 1980. It is in this search operation, several incriminating documents were seized. On scrutiny, it inter alia revealed that assessee had debited personal insurance premium of directors in the books of company, which in fact, ought not to have debited, that cost of plywood and mirrors was debited in the books of company, with a view to inflate the expenses in respect packing material wrongly and lastly, it did not disclose value of stocks valuing Rs. 1,0 1,044 lying at Madras. It is these factors, which gave rise to reopen the concluded assessment cases of the year in question by taking recourse to section 147(a) of the Act. An explanation was sought from assessee and finding the same to be not satisfactory, the penalty under section 271(1)(c) of the Act for furnishing inaccurate particulars of income was imposed by assessing officer. Though, it was set aside by C.I.T. (Appeals), the same was restored by Tribunal by their order out of which this reference arises at the instance of assessee under section 256(1) ibid made by the Tribunal.
4. Heard Mr. V. Assudani, learned counsel for applicant and Mr. R.L. Jain, learned Sr. advocate with Ku. V. Mandlik, learned counsel for respondent.
5. Having heard the learned counsel for the parties and having perused the record of the case, we answer the question against an assessee and in favour of revenue.
6. Mere perusal of facts stated in the statement of facts drawn by the Tribunal would show that assessee did not disclose their true particulars while submitting their income tax returns for the year in question. Had there been no raid operations in the business/ residential premises of assessee, the particulars which were made basis of reopening of an assessment would not have come to the notice of the assessing officer. In fact, the material particulars were not disclosed in the original return, are admitted and they were equally material for taxing purpose. are also admitted. Similarly, they ought to have been subjected to tax are also admitted.
7. The Explanation offered by assessee was not accepted by assessing officer and Tribunal. Both did go into the factual Explanation and found no merit in the same. The Tribunal had jurisdiction to go into the factual Explanation and then to accept the same or reject it. The same was rejected. The reference court cannot go into the sufficiency or/and correctness of the Explanation in its reference jurisdiction. No question of law has been referred to this court on that issue. In this view of the matter, the finding recorded by the Tribunal on that question is binding on the reference Court.
8. Coming to the last question referred supra, we find no merit in the same. The assessing officer has jurisdiction to initiate the penalty proceedings under section 271(1)(c) of the Act, once it comes to his notice that assessee has furnished inaccurate particulars in their return or that assessee has not disclosed his true income which is very much in his knowledge. In this case, there was enough material for issuance of’ notice under section 271(1)(c) ibid because the department had conducted raid in the office/ residential premises of assessee and seized several incriminating documents for forming a prima facie opinion regarding concealment of true income. This very reasoning applies to answer question No. 2 against an assessee.
9. In our opinion, it is not a case of technical breach or what one may call venial breach on the part of assessee in not disclosing his true income. All the suppression or/and disclosure as taken note of supra and which were made basis, were very much within the knowledge of assessee-it being a professional-led company managed by Chartered Accountants. In other words, the intention to suppression or/and take benefit of incorrect disclosure seems apparent thereby attracting the rigour of section 271(1)(c) ibid.
10. In view of the aforesaid discussion, we answer both the questions against an assessee and in favour of revenue, No cost.