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Issues involved: The Department requested the court to direct the Tribunal to refer questions regarding the cancellation of penalties under section 271(1)(c) of the Income-tax Act for the assessment years 1986-87 and 1988-89.
Assessment year 1986-87: The assessee, a wholesale dealer, filed a revised return showing additional income after discrepancies were discovered. The Income-tax Officer initiated penalty proceedings under section 271(1)(c) which was imposed despite the explanation provided by the assessee. On appeal, the Tribunal considered the mistake in the ledger, the death of the accountant responsible for the error, and the fact that penalty proceedings were dropped for the subsequent year. The Tribunal concluded that the penalty was not exigible for this assessment year. Assessment year 1988-89: The assessee filed a return showing income, but a mistake in totaling was discovered during assessment. The penalty was imposed despite the explanation that the mistake was due to the negligence of the now-deceased accountant. The Commissioner (Appeals) confirmed the penalty, but the Appellate Tribunal, considering the circumstances and lack of evidence connecting the mistake to the partner of the firm, cancelled the penalty as it was not possible to fasten liability on the partner. The Tribunal found no attempt to conceal income and no evidence of deemed concealment, leading to the cancellation of the penalty. The court dismissed the tax case petitions as no referable question of law arose based on the facts and conclusions of the Tribunal in both assessment years.
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