D.P. Wadhwa, C.J.
1. On an application filed under Section 256(2) of the Income-tax Act, 1961, by the assessee, a Bench of this court directed the Tribunal to draft a statement of the case and refer the following question of law for a decision :
'Whether, on the facts and in the circumstances of the case, the imposition of penalty of Rs. 11,352 under Section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 1967-68 is legal and valid ?'
2. As to how the reference has been called for we may note a few facts from the statement of the case sent by the Income-tax Appellate Tribunal, Patna Bench 'A', Patna. The assessee, it appeared, filed a suit for recovery of certain money due to him from the Public Works Department of the State of Bihar. The suit was decreed on September 13, 1965, in favour of the assessee for the sum of Rs. 52,386 with costs. The amount so decreed included interest to the extent of Rs. 11,352 for the period from February 8, 1961, to September 13, 1965. The assessee received the decreed amount as well as the interest on March 20, 1967. The assessee did not maintain any books of account. He was a contractor and derived income from contract work and plying of trucks. His income was being assessed on estimate and was on receipt basis. For the assessment year 1967-68, the assessee filed his return of income on August 18, 1968, but did not show the amount of interest received by him in his return. He only disclosed truck receipts and the profit estimated thereon. The Income-tax Officer while completing the assessment included Rs. 11,352, referred to above,
as income from other sources. The assessment of this amount for the year 1967-68 was accepted by the assessee as he did not contest the same by filing an appeal and, therefore, the assessment became final. Thereafter, the Income-tax Officer initiated proceedings under Section 271(1)(c) in respect of the addition of Rs. 11,352. He held that the assessee did not disclose this amount in his return and that he was guilty of the charge of concealment. A penalty of Rs. 11,352 was imposed on the assessee. The appeal of the assessee before the Appellate Assistant Commissioner was dismissed. His further appeal to the Appellate Tribunal also met with the same fate. The Appellate Tribunal dismissed the application of the assessee filed under Section 256(1) of the Act. It was thereafter on an application under Section 256(2) of the Act, that this court called for a reference on the question of law set out above.
3. Mr. Jain, learned counsel for the assessee, did not dispute that the assessee was rightly assessed for the assessment year 1967-68 for the amount of Rs. 11,352 as income received by him from other sources. He, however, submitted that proceedings under Section 271(1)(c) of the Act were independent and it was not material whether the assessee accepted the quantum of assessment or not. His submission was that there was no accrual of income of interest and that the suit decreed by the court was the subject-matter of appeal and till the appeal was decided by the higher court, it could not be said that the assessee received any income. Mr. Jain also sought to bring on record the judgment in appeal against the decree wherein he said that the award of interest in favour of the assessee had been set aside. His submission, therefore, in short was that the assessee could not be visited with penalty under Section 271(1)(c) of the Act on an amount which ultimately was not to be his income.
4. The argument as made appears to be attractive. But such was not the case of the assessee before the Appellate Tribunal. We have to go by the record as existed before the Appellate Tribunal and cannot take into account subsequent events to justify or challenge the order of the Appellate Tribunal. When the assessee filed an application under Section 256(1) of the Act before the Appellate Tribunal, he sought reference on three questions said to be questions of law and these being-
1. Whether the finding of the Tribunal that the amount has been correctly assessed in the assessment year 1967-68 is legal and valid ?
2. Whether the Tribunal is right in law in holding that the penalty of Rs. 11,352 was leviable under Section 271(1)(c) for the assessment year 1967-68 ?
3. Whether, on the facts and circumstances of the case, the imposition of penalty of Rs. 11,352 under Section 271(1)(c) for the assessment year 1967-68 is legal and valid
5. Along with his application under Section 256(1) of the Act the assessee also brought up a draft statement of case for the benefit of the Appellate Tribunal. After setting out the order of the Income-tax Appellate Tribunal imposing penalty under Section 271(1)(c) of the Act and the confirmation of the same by the Appellate Assistant Commissioner, the assessee before stating the questions said as under :
'On further appeal to the Tribunal, the same contentions were raised but with no success. The Tribunal came to the conclusion that as the petitioner had not maintained any accounts and was assessed on receipt of amounts, the interest was taxable as income of this year when it had actually been received by the assessee. They held that the amount had been correctly assessed in this year and was not assessable in a different year. The Tribunal, however, committed an error of record while observing moreover we find that the court's decree was for the payment of interest on the date of realisation. It is apparent from the decree that interest for the period up to September 13, 1965, had already been awarded to be paid and further interest only was ordered to be paid till the date of realisation. Thus the right to receive the interest as per the order of the court had already accrued on the date of decree, namely, September 13, 1965, and accordingly at best the amount fell to be assessed as income of that year. The Tribunal also committed an error of record in overlooking the fact that the amount in question had been assessed by the Income-tax Officer and confirmed by the Appellate Assistant Commissioner as income from undisclosed sources.'
6. It would be thus seen that the assessee had been contesting his case on the basis that he could not have been assessed for the assessment year 1967-68 which stand he has now given up before us. There is no mention of filing of any appeal by the Public Works Department of the State of Bihar against the judgment and decree awarding interest to the assessee. While dismissing the appeal of the assessee against imposition of penalty, the Appellate Tribunal after considering the relevant facts held as under:
'We have carefully considered the facts of the case and gone through the records of the assessee. In the return filed for this year there is no mention of the court's decree or the receipt of interest which had been awarded by the court. We also find that the fact regarding the decree
and the receipt of interest had not been indicated in either the return for the assessment year 1966-67 or the return for this year. Both the returns were filed on August 28, 1968. Under these circumstances, the plea of learned counsel that the income was not assessable, in this year and was, therefore, not shown appears to be merely an excuse. The assessee had not indicated this fact even in the earlier year. Moreover, we find that the court's decree was for the payment of interest on the date of realisation. In this view of the matter and also considering the fact that the assessee was not maintaining any accounts and was assessed on the receipt of amounts, the interest was taxable as the income of this year when it had actually been received by the assessee. There is no question of the income being the income for a different year and, in our view, the amount had been correctly assessed in this year. The assessee had also accepted the assessment of this amount in this assessment year. The fact that no mention was made regarding the court's decree awarded, the award of interest and the actual receipt of interest clearly shows that the assessee had no intention of disclosing this income to the Income-tax Officer. It was only accidentally that almost four years after the filing of the return the fact regarding receipt of interest came to the knowledge of the Department when the assessee was explaining the position of his capital for a later year. In such circumstances, the non-disclosure of this amount appears to be wilful. Taking the most charitable view, it was an act of gross neglect. In these circumstances, we are of the view that penalty had correctly been imposed for non-disclosure of interest income. The return of income had been filed on August 28, 1968, and in view of this the amended law was applicable to the imposition of penalty and the Income-tax Officer had the jurisdiction to pass order imposing penalty in this case. Considering all the aspects of the matter, we uphold the order of penalty and dismiss the assessee's appeal.'
7. In this view of the matter, we are unable to subscribe to the view now canvassed before us that the liability regarding the amount of interest was itself in dispute. We do not find the decision of the Supreme Court in CIT v. Hindustan Housing and Land Development Trust Limited : [1986]161ITR524(SC) , has any application in the present case. We will, therefore, answer the question in the affirmative and in favour of the Revenue. Since the matter is of the year 1967-68, there shall be no order as to costs.
S.J. Mukhopadhaya, J.
8. I agree.