1977 (8) TMI 38 - HC - Income Tax

Summary

Issues:
1. Refusal of the Tribunal to state a case to the High Court for the question of law regarding the cancellation of a penalty under section 271(1)(c) of the Income-tax Act, 1961.
2. Assessment of penalty under section 271(1)(c) based on concealed income and the subsequent cancellation of the penalty by the Tribunal.

Analysis:
1. The Commissioner of Income-tax filed an application under section 256(2) of the Income-tax Act against the Tribunal's order declining to state a case to the High Court regarding the cancellation of a penalty under section 271(1)(c). The Tribunal had earlier declined to refer the question of law arising from the cancellation of the penalty imposed on the assessee. The Commissioner contended that the Tribunal erred in its decision. The counsel for the revenue relied on the Explanation to section 271(1)(c) and a previous court decision. On the other hand, the counsel for the assessee argued that no question of law arose from the Tribunal's order. The court referred to relevant case laws and held that the onus lies on the assessee to prove that concealment was not deliberate, emphasizing the strict interpretation of the income-tax law. The court directed the Tribunal to refer the question of law to the High Court for consideration.

2. The penalty under section 271(1)(c) was imposed by the Inspecting Assistant Commissioner based on the concealment of income by the assessee. The Tribunal later cancelled the penalty after finding that the evidence presented by the revenue was fabricated to support the charge of concealed income. The Tribunal's decision to cancel the penalty was challenged by the Commissioner of Income-tax. The court analyzed the Explanation to section 271(1)(c) and highlighted the burden on the assessee to prove non-deliberate concealment. The court emphasized the detrimental impact of income concealment on the economy and the strict interpretation of tax laws. Considering the facts of the case, the court held that the question of law indeed arose from the Tribunal's order, directing the Tribunal to refer the matter to the High Court for further examination.