Commissioner of Income Tax vs Ram Lal Manohar Lal

S. Ranganathan, J.—For the asst. yr. 1964-65 an assessment was completed on the respondent-assessed. Ram Lal Manohar Lal under s. 147(a) r/w s. 148 of the IT Act, 1961. By this assessment completed on 31-1-1974 the assessed''s total income was determined at Rs. 1,40,238 after including therein a sum of Rs. 1,40,238 after including therein a sum of Rs. 77,026 on account of cash credits to the extent of Rs. 75,000 and interest claimed to have been paid thereon. Simultaneously proceedings under s. 27(1)(c) were initiated and the penalty of Rs. 77,026 was imposed. The assessed preferred appeals against both the assessment order and the penalty order. By an order dt. 29-10-1981 in ITA No. 4843 (Del)/79 the ITAT held that the re-assessment proceedings were invalid and cancelled the same. When the appeal against the penalty (ITA No. 1288/80) came before the Tribunal, the Tribunal cancelled the penalty consequent on its earlier order invaliding re-assessment.

By this application, the CIT seeks a reference to the following question for the decision of this court :

"Whether of the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the penalty of Rs. 77,026 imposed under s. 271(1)(c) of the IT Act, 1961 in this case is non-existent in spite of the fact that the order of the Tribunal in ITA No. 4843 (Del)/79 by which the re-assessment proceedings were held to be invalid and illegal has not been accepted by the department and a reference application against the same is pending before the Tribunal ?"

It is now brought to our notice that ITC 76/82 which was an application for reference of a question of law said to arise out of the order of the Tribunal in assessment appeal has since been dismissed by the order of this court dt. 1-2.1985. In other words the order of the Tribunal holding that the re-assessment under s. 148 was invalid stands upheld by this court. In view of this order it follows that no question of law for reference can be said to arise out of the order by which the Tribunal deleted the penalty. We, Therefore, dismiss this application but in the circumstances, we make no order as to costs.