1976 (9) TMI 54 - AT - Income Tax

Summary

Issues:
1. Levy of penalty u/s. 271(1)(c) for the assessment year 1969-70.
2. Concealment of income by the assessee.
3. Settlement agreement between the assessee and the department.
4. Interpretation of evidence in a concealment matter.
5. Proper form of reference application by the assessee.

Detailed Analysis:

1. The judgment by the Appellate Tribunal ITAT Cochin involved the disposal of two reference applications, one by the Commissioner of Income-tax and the other by the assessee, regarding the levy of penalty u/s. 271(1)(c) for the assessment year 1969-70. The applications stemmed from an appeal by the assessee against the penalty imposed by the Tribunal.

2. The investigation revealed that the assessee's chitty business generated substantial cash used in their banking business, with interest income to be assessed in their hands. The assessee made a disclosure petition detailing the modus operandi of their business, including large deposits in fictitious names and gold loan activities. The return filed by the assessee disclosed interest on advances outside the books and on bogus deposits, which was accepted by the Income-tax Officer.

3. A settlement was reached between the assessee and the department, leading to the agreement on the levy of penalty for concealment of income. However, the Tribunal found specific charges of concealment for the assessment year baseless due to various reasons, including the timely disclosure by the assessee and discrepancies in figures due to differing interest rates adopted.

4. The Tribunal concluded that there was no concealment of income based on the evidence presented, emphasizing that the agreement for the penalty levy was insufficient evidence against the detailed disclosures made by the assessee. The judgment highlighted the importance of weighing all evidence in a concealment matter.

5. The Tribunal rejected the Commissioner's application, noting that the questions raised were factual findings rather than legal issues. The assessee's reference application, although initially not in proper form, was allowed to be rectified. However, since the penalty was canceled and no case was stated as required by the CIT, the reference of the legal question regarding limitation was deemed academic, leading to the rejection of the assessee's application as well.