2004 (5) TMI 48 - HC - Income Tax

Question of law/fact Tribunal rejecting the prayer for making a reference to HC - imposition of penalty u/s 271(1)(c) - We concur with the observation of the Tribunal and find that the issue really does not involve any question of law - The imposition of penalty requires some material to be used against the assessee which may be held to be a case of concealment. No such factual material could be filed or produced or taken note of by the Assessing Officer and hence, the CIT (Appeals) and the Tribunal quashed the imposition of penalty. This court cannot go into the question of fact recorded by the two appellate authorities and hence such finding being a finding of fact, the same is binding on this court. We, thus, find that no question of law as such arises in the case.

Summary

Issues:
Imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961.

Analysis:
The judgment pertains to an application by the Revenue (Income-tax Department) under section 256(2) of the Income-tax Act, 1961, seeking a reference on a question proposed for answering under section 256(1) of the Act. The Income-tax Appellate Tribunal had previously declined to make the reference, citing the absence of any legal question and deeming the matter to be purely factual. The court, after hearing arguments from both sides, upheld the Tribunal's decision, concurring that the case did not involve any legal question necessitating a reference to the court.

The central issue in question revolved around the imposition of penalty under section 271(1)(c) of the Act. Both the Commissioner of Income-tax (Appeals) and the Tribunal had nullified the penalty imposed by the Income-tax Officer, reasoning that without concrete evidence of concealment in the assessee's income, the penalty could not be upheld. The Tribunal correctly determined that no legal question was at play in this matter, as the decisions by the appellate authorities were based on factual assessments rather than legal interpretations. The court agreed with this stance, emphasizing that the imposition of a penalty required substantial evidence of concealment, which was lacking in this case. As the factual findings of the Commissioner of Income-tax (Appeals) and the Tribunal were conclusive and binding, the court found no legal question for its consideration.

Ultimately, the court dismissed the application, concluding that it lacked merit and substance. The judgment underscores the distinction between factual determinations and legal questions, highlighting the necessity of concrete evidence to support the imposition of penalties under the Income-tax Act, 1961.