1993 (3) TMI 82 - HC - Income Tax

Summary

Issues:
Application under section 256(2) of the Income-tax Act, 1961 for direction to draw up a statement of case and refer a question of law regarding the cancellation of penalty.

Analysis:
The case involved the Commissioner of Income-tax, Orissa, seeking direction to the Tribunal to refer a question of law regarding the cancellation of penalty of Rs. 16,860 imposed on an assessee for not filing a statement or estimate of income within the prescribed time. The Tribunal considered the turnover aspect and held that the assessee had made out a case for cancellation of penalty for one year but upheld it for another year. The Revenue contended that the Tribunal's conclusion was abrupt and relied on irrelevant materials, while the assessee argued that the Tribunal's decision was based on detailed discussions and factual findings. The burden of proof was on the assessee to show that the estimate was not known to be untrue, and the Tribunal considered the turnover variations and comparative incomes of previous years in reaching its decision. The Court found that the Tribunal's conclusion was not perverse and no question of law arose, rejecting the reference application.

Conclusion:
The High Court dismissed the reference application under section 256(2) of the Income-tax Act, 1961, as no question of law arose from the Tribunal's order. The judgment highlighted the importance of honest estimates in tax matters and the burden of proof on the assessee to demonstrate the lack of knowledge or belief in the inaccuracy of the estimate. The Court upheld the Tribunal's decision based on relevant materials and factual findings, emphasizing that the Tribunal's conclusion was not arbitrary.