Law:

Section:

Section 69, read with section 256 of the Income-tax Act, 1961 - Unexplained investments - Assessment year 1966-67 - Assessee who had incurred certain expenses on account of construction of a house filed its return of income for relevant assessment year - Tribunal held that difference between estimated cost of building constructed between years 1962 to 1965 was much higher than amount disclosed by assessee in books of account and treated same as income from undisclosed sources pertaining to relevant assessment year and to that extent penalty was imposed on assessee for concealment of income under section 271(1)(c) - Whether question as to whether Tribunal was legally justified in treating specified sum as income of assessee from undisclosed sources in derogation of provision of section 69, was a question of law which needed reference under section 256(2) - Held, yes - Whether question as to whether assessee was guilty of concealment of income in specified sum and was liable to pay penalty on said sum even if order passed in quantum proceeding were varied to assessee's advantage in reference called for in such proceedings would be referred to High Court - Held, yes FACTS The assessee who had incurred certain expenses on account of construction of a house filed its return of income in the sum of Rs. 20,503 for the assessment year 1966-67. However, the Tribunal considered that the difference between the estimated cost of the building constructed, between the year 1962 to 1965, was Rs. 90,597 as against Rs. 70,495, which was disclosed according to the books of account of the assessee. Thus, an amount of Rs. 20,102 was considered by the Tribunal to be the income of the assessee from undisclosed sources. Further the Tribunal estimated the income of the assessee from undisclosed sources between 1964 and 1965 at Rs. 13,000 and added the same to the total income of the assessee. Further on account of concealment of income to the extent of Rs. 13,000 penalty was also imposed upon the assessee. The assessee thereafter filed an application before the Tribunal for making reference of the question as to whether the Tribunal was justified in sustaning in the addition of Rs.…

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