Law:

Section:

Section 256 read with section 271(1)(c), of the Income-tax Act, 1961 - Reference - Question of law - A coparcener of assessee-HUF entered into partnership with another person with funds provided by HUF - Profits from said partnership firm were claimed to be personal income of coparcener - ITO included said income in income of HUF and imposed penalty on HUF under section 271(1)(c) - Whether any question of law arose from Tribunal's order upholding levy of penalty - Held, on facts, yes Facts D, one of the coparceners of the assessee-HUF entered into a partnership agreement with one P with funds provided by the HUP. In the relevant years a certain amount of profit had been received from the said firm and were claimed by D to be his personal income but the assessing authority included the said amount in the income of the HUF on the ground that D had entered into the agreement not in his individual capacity, but as a coparcener representing the HUF. As the said income was not reflected in the income of the assessee-HUF, penalty was imposed under section 271(1)(c) for concealment of income. The Tribunal also upheld the order of the assessing authority and rejected the application for reference. On application under section 256(2): Held On the facts found in the instant case, whether penalty would be exigible or not would, at least, be a mixed question of law and fact, if not a pure question of law. The Tribunal was, therefore, directed to refer the question to the Court. R.P. Sahney for the Applicant. Ashok Bhan for the Respondent. Judgment Goyal, J.- The assessee, Bhag Mai Charanji Lai, is an HUF concern. Darshan Kumar, one of the coparceners, entered into a partnership agreement on 1-5-1967, with one Pashupati Nath to carry on the business of sale of petroleum products and so, under the firm named Darshan Kumar & Co. The amounts of Rs. 995 and Rs. 10,413 received by way of profits from the said concern for the assessment years 1968-69 and 1971-72 were claimed by Darshan Kumar as his personal income but was included by the assessing authority in the income of the HUF holding: that Darshan Kumar entered into the agreement not in his individual capacity but as a…

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