1996 (4) TMI 46 - HC - Income Tax

Assessing Officer Assessment Year Business Premises Original Assessment Penalty Proceedings Question Of Law Revised Returns Undisclosed Income Unexplained Investments

Summary

Issues:
1. Whether the Tribunal was justified in canceling the penalty levied under section 271(1)(c) of the Income-tax Act, 1961?

Detailed Analysis:
The judgment involved four applications under section 256(2) of the Income-tax Act, 1961, where the Department sought a direction to the Income-tax Appellate Tribunal, Indore, to refer a common question of law arising from the Tribunal's order dated May 29, 1992. The question pertained to the cancellation of penalties imposed under section 271(1)(c) for the assessment years 1983-84 to 1986-87. The penalties were imposed by the Assessing Officer, upheld by the Commissioner of Income-tax (Appeals), and subsequently canceled by the Tribunal in second appeals. The Tribunal's decision was challenged through reference applications under section 256(1) which were rejected, leading to the present applications under section 256(2) before the High Court.

The court heard arguments from both parties, with the Department contending that the assessee's revised returns were not a voluntary disclosure but a result of detection of concealment. The Department argued that the initial returns filed by the assessee were contumacious and aimed at evading tax, which was not absolved by the subsequent revised returns. The Department relied on case law to support its position. On the other hand, the assessee's counsel opposed the applications, emphasizing that the Tribunal's finding on the lack of proof of concealment by the Department was a factual determination not giving rise to a legal question. The assessee's counsel cited relevant case law to support this argument.

Upon a detailed examination, the court refrained from expressing an opinion on the merits but found that the Tribunal's order did raise a common question of law for consideration. The court directed the Tribunal to refer the question for the court's opinion regarding the appellate order in the four appeals. The reference applications were allowed, and the court instructed the Tribunal to comply expeditiously. The court also allowed counsel's fees for both sides but made no order as to costs. The judgment was retained in a specific case number and copies were placed in related cases for record-keeping purposes.