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Issues Involved:
Reference u/s 256(2) of the Income-tax Act, 1961 regarding cancellation of penalty order. Summary: The High Court of Bombay delivered a judgment on a reference u/s 256(2) of the Income-tax Act, 1961, made by the Revenue. The case pertained to the assessment year 1959-60 where the assessee, an unregistered firm engaged in the export-import business, had filed its return showing income of Rs. 61,286. The Income-tax Officer estimated sales and made additions to the income, which were later reduced by the Income-tax Appellate Tribunal. The penalty was imposed by the Inspecting Assistant Commissioner under section 271(1)(c) of the Act, but the Tribunal cancelled it. The Tribunal held that no penalty was imposable as concealment of income was not proved. The Revenue contended that the judgment of the Supreme Court in Jain Brothers v. Union of India overruled the previous Bombay High Court judgment, and thus, the penalty should have been upheld. However, the High Court upheld the Tribunal's decision, stating that the allegation of concealment was not proven, and additions in the trading account did not necessarily indicate concealment of income. In conclusion, the High Court answered the reference question in favor of the assessee, emphasizing that the Tribunal's finding on concealment was unassailable. No costs were awarded considering the circumstances of the case.
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