Imposition of penalty under Section 271 (1) (c) read with Section 274 of the Income-tax Act, 1961, and the Tribunal's justification in confirming the quantum of penalty.

( 1 ) THE following questions are involved in this reference under Section 256 (2) of the I. T. Act, 1961:"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in ordering the imposition of penalty on the assessee under Section 271 (1) (c) read with Section 274 of the Income-tax Act, 1961, on the annual income of M/s. Hindusthan Trading Corporation on the return filed by Sm. Bhadra Mitra ?

( 2 ) IF the answer to question No. 1 is in the affirmative, whether on the facts and in the circumstance of the case, the Tribunal was justified in confirming the quantum of penalty and dismissing the appeal? "2. The assessee is an individual and the reference relates to the assessment year 1965-66. In the return of income the assessee did not show the income from the business under the name and style of M/s. Hindusthan Trading Corporation and the capital gains from the sale of a land which stood in the name of his wife.

( 3 ) THE ITO included the income of Hindusthan Trading Corporation and also the capital gains in respect of the aforesaid in the assessment. The AAC dismissed the appeal filed by the assessee who filed a further appeal before the Tribunal.

( 4 ) THE Tribunal found that the business of Hindusthan Trading Corporation belonged to the assessee. The said finding of the Tribunal was based on an admission made by the assessee in the earlier appeals that the aforesaid business belonged to him. In that view of the matter, the Tribunal upheld the inclusion of income from the said business.

( 5 ) THE Tribunal, however, remanded the question of inclusion of capital gains in the assessment of the assessee to the AAC for a fresh decision.

( 6 ) IN the penalty proceedings, the IAC to whom the penalty proceedings were referred, held that the assessee had concealed the particulars of his income and furnished inaccurate particulars thereof both with regard to the income from the business of Hindusthan Trading Corporation and the capital gains. The AAC has rejected the appeal filed by the assessee. The Tribunal has sustained the imposition of penalty.

( 7 ) IN view of the facts and the circumstance of the case relating to Hindusthan Trading Corporation, we answer question No, 1 in the affirmative and in favour of the revenue.

( 8 ) WE now reframe question No. 2 as follows :" Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the quantum of penalty ? "

( 9 ) AS already stated, in the quantum appeal the Tribunal has remanded the question of inclusion of capital gains in the assessment of the assessee. Therefore, in our opinion, the Tribunal was not justified in confirming the quantum of penalty which included the capital gains.

( 10 ) IN the premises, we answer question No. 2 in the negative and in favour of the assessee.

( 11 ) THE Tribunal will re-hear both the parties on the issue of inclusion of penalty relating to capital gains after the quantum appeal for the aforesaid assessment year is finally disposed of.

( 12 ) THERE will be no order as to costs.

( 13 ) LET a copy of the order of the Tribunal passed in the quantum appeal be kept on the record as desired by the learned counsel for both the parties.