( 1 ) THIS is a reference under Section 256 (1) of the I. T. Act, 1961.

( 2 ) THE assesses was originally assessed in the status of an unregistered firm relating to the assessment year 1957-58 on a total income of Rs. 19,739.

( 3 ) THE assessee thereafter made a disclosure of Rs. 10,000 as its income which had escaped assessment for the aforesaid assessment year. The ITO therefore, reopened the assessment under Section 147 (a) of the I. T. Act, 1961, and issued the relevant notice under Section 148 of the Act. In response to the said notice the assessee filed a return on March 11, 1970.

( 4 ) IN the aforesaid return under Section 148 of the Act, the assessee included Rs. 12,500 as hundi loan but failed to prove its genuineness. The ITO, therefore, added Rs. 12,500 as the income of the assessee from undisclosed sources. This order was passed on 12th March, 1970.

( 5 ) IN the course of reassessment proceedings the ITO was also satisfied that the assessee had concealed the particulars of its income and, therefore, on March 12, 1970, he initiated penalty proceedings under Section 274 read with Section 271 (1) (c) of the Act and referred the penalty proceedings on the same