Additional Commissioner of Income Tax vs Chandmull Radha Kishun

By this reference u/s 256(2) of the Income Tax Act, 1961, the following question has been referred to us for our opinion :

"Whether, on the facts and in the circumstances of this case, the Tribunal was legally justified in cancelling the order of the Inspecting Assistant Commissioner of Income Tax imposing penalty u/s 271(1)(c) of the Income Tax Act read with the Explanation appended thereto ?"

In these two tax cases, we are concerned with the assessment years 1964-65 and 1965-66. The assessee returned a sum of Rs. 87,712 and Rs. 82,366, respectively, for the two assessment years. The Appellate Assistant Commissioner assessed at Rs. 1,22,984 and Rs. 1,10,403 for the assessment years. A difference of more than twenty per cent. having been found, the Income Tax Officer was of the view that there had been concealment of income by the assessee. Since in his view, the penalty likely to be imposed would be above Rs. 1,000, he referred the matter to the Inspecting Assistant Commissioner. The latter imposed penalties of Rs. 6,230 and Rs. 4,183, respectively, for the two years. The penalty matter went up in appeal to the Tribunal which set aside the order of penalty of the Inspecting Assistant Commissioner on the ground that the assertion by the assessee in regard to his return was sufficient to discharge the onus. The Tribunal relied upon Hindustan Steel Ltd. Vs. State of Orissa, , in which it has been held that no penalty could be imposed unless the party acted in deliberate defiance of law or was guilty of contumacious or dishonest conduct, or had acted in conscious disregard of his obligation. The deletion of penalty, on this ground, was not accepted by the Commissioner. An application for reference u/s 256(1) of the Act was, therefore, filed, but without any success. The Commissioner got the present reference made u/s 256(2) of the Act. In terms of the direction of this court, the question referred to above has been sent to us. At the time of hearing of these tax cases, Mr. Rameshwar Prasad, learned counsel for the assessee, filed an affidavit enclosing the order of the Income Tax Appellate Tribunal dated August 30, 1972, passed in I. T. A. Nos. 2296-Pat. and 2297-Pat. of 1969-70, which shows that in the assessment, substantial relief had been given to the assessee. On the basis of this order of the Tribunal, Mr. Rameshwar Prasad submitted that the assessee''s returned figure was more than 80 per cent. of the final assessed sum and, therefore, there was no case for imposition of penalty.

It appears that the Appellate Tribunal gave some relief to the assessee in terms of which the assessable amount has fallen and the gap between the assessed sum and the returned sum is less than 20 per cent. (of the assessed amount). We have no reason to doubt that the order filed before us is not a correct copy of the order passed by the Tribunal.

Mr. B.P. Rajgarhia, senior standing counsel, is obviously not in a, position, for good reason, to say either way, whether the order of the Tribunal is genuine or not. But since the order has been filed on affidavit, we proceed on the basis of the order. If this is correct, the difference falls below 20 per cent. between the returned and the assessed figures. The case has now assumed a different complexion. This figure was not before the Tribunal. The question of penalty, therefore, requires fresh consideration. The matter, therefore, must be remanded to the Tribunal for applying itself to the question whether the penalty can and should be imposed or not. We, therefore, refuse to answer the question referred to us. The Tribunal will now dispose of the appeal against the order of imposition of penalty in accordance with law on the basis of the finally assessed sum. There shall be no order as to costs.

Let a copy of this order be transmitted to the Tribunal under the seal of the court and under the pen of the Registrar as soon as possible.