1981 (3) TMI 126 - AT - Income Tax

Summary

Issues:
Whether the Tribunal should refer a question of law to the High Court regarding deliberate concealment of income or applicability of Explanation to section 271(1)(c) of the IT Act, 1961.

Analysis:
The case involved a dispute regarding penalty proceedings initiated by the Income Tax Officer (ITO) under section 271(1)(c) of the IT Act, 1961, alleging concealment of income by the assessee. The ITO imposed a penalty for concealment, which was later reduced by the Appellate Authority. The Tribunal, on further appeal by the assessee, considered the applicability of the Explanation to section 271(1)(c) and whether there was deliberate concealment of income. The Tribunal ultimately held that there was no conscious concealment of income on the part of the assessee due to fraud or wilful neglect, and thus, the penalty was cancelled. The Tribunal emphasized that the burden of proof lies on the assessee to show that concealment was not due to fraud or wilful neglect when the Explanation to section 271(1)(c) is applicable. The Tribunal's decision was based on a factual analysis of the case, concluding that no question of law arose from its findings.

The Commissioner of Income Tax (CIT) sought to refer a question of law to the High Court, questioning whether the assessee deliberately concealed income or if the case fell under the Explanation to section 271(1)(c) of the IT Act, 1961. However, the Tribunal declined to refer the question to the High Court, stating that the Tribunal's decision was based on factual findings and there was no legal issue to be addressed. The Tribunal clarified that the burden of proof regarding concealment not being due to fraud or wilful neglect lies on the assessee when the Explanation to section 271(1)(c) is applicable. The Tribunal's decision highlighted that the penalty was not sustainable under the main provision of section 271(1)(c) or its Explanation, as there was no evidence of fraud or wilful neglect on the part of the assessee. Therefore, the Tribunal rejected the application to refer the question of law to the High Court, emphasizing that the matter was a question of fact rather than a legal issue.