9911796707
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Issues:
1. Application for direction to the Income-tax Appellate Tribunal under section 256(2) of the Income-tax Act of 1961. 2. Justification of the Tribunal in holding that the declaration filed ruled out fraud, gross neglect, and wilful neglect. 3. Imposition of penalty under section 271(1)(c) of the Act. 4. Tribunal's decision on the absence of a legal question and error of law in the appellate decision. 5. Consideration of the disclosure petition and its impact on the penalty matter. 6. Assessment of the source of funds and the Tribunal's findings on the same. Analysis: 1. The judgment pertains to an application by the revenue under section 256(2) of the Income-tax Act of 1961, seeking a direction to the Income-tax Appellate Tribunal to refer a legal question arising from the Tribunal's decision. The question at hand was whether the Tribunal was justified in ruling out the possibility of fraud, gross neglect, and wilful neglect based on a declaration filed by the minor daughter of an erstwhile partner of the assessee-firm. 2. The case involved the imposition of a penalty of Rs. 12,000 under section 271(1)(c) of the Act by the Inspecting Assistant Commissioner. The penalty was based on the assertion that a claimed loan of Rs. 20,000 from a specific source constituted undisclosed income. However, the Appellate Tribunal, in its decision, considered various aspects, including the claim that the funds belonged to the daughter of the erstwhile partner, leading to the cancellation of the penalty imposition. 3. The Tribunal's decision was based on the finding that there was no direct evidence to prove that the amount added back was the income of the assessee. The Tribunal also considered the disclosure petition and the supporting material provided, which indicated that the funds had come from the declarant's source. Despite the assessment stage not accepting this explanation, the Tribunal absolved the assessee from the penalty liability under section 271(1)(c) of the Act. 4. When the Tribunal was requested to make a reference, it determined that no legal question arose from its decision and that there was no error of law committed. The Tribunal's reliance on the facts stated in the declaration to support its decision was deemed appropriate, considering the material aspects and legal provisions taken into account during the assessment. 5. The judgment highlighted the importance of considering all relevant evidence and legal provisions in penalty matters. It emphasized that while different forums might have taken a different view, such discrepancies in opinions do not necessarily give rise to a legal question. The application for direction was ultimately rejected, with no direction for costs. 6. Both judges, R. N. Mishra and N. K. Das, concurred with the decision, indicating agreement with the Tribunal's assessment and the absence of a legal question warranting further reference. The judgment underscored the significance of factual considerations and adherence to legal principles in penalty imposition matters under the Income-tax Act of 1961.
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