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TMI Blog1975 (12) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... to show cause under Section 28(3) was served on 1st Dec 1959 as to why penalty be notimposed. The Income-tax Officer imposed a penalty of ₹ 20,000/- under Section 28(1)(c) of the Income Tax Act, on 27-6-1961. The assessee firm feeling aggrievec against this order of imposing of pen alty filed an appeal before the Appellate Assistant Commissioner of Income Tax, 'B' Range, Jaipur. The appeal filed by the assessee firm was dismissed on 24/3/65 by the Appellate Assistant Commissioner, Jaipur The assessee from then filed an appeal before the Income Tax Appellate Tribunal, Delhi This appeal was accepted by the Appellate Tribunal on 23/3/67. and the order of the Income Tax Officer dated 27/6/61 imposing a penalty of ₹ 20,000/ was set aside. 3. The Commissioner of Income Tax Rajasthan, Jaipur made a reference application under Section 66(1) of the Income Tax Act, 1922 before the Income Tax Appellate Tribunal, Delhi requesting it to state the case and refer the following questions of law which arise out of this order dated 23-31967: 1. Whether on the facts and in the circumstances of the case, the Tribunal was right in drawing an inference that the profit of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not amount that a totally new or different question of law has been referred which was not covered in the application under Section 66(1) of the Income Tax Act, 1922. It was also conteded that the courts have to look to the pith and substance of the matter rather than to go to mere technicalities of law, which may be enhance the ends of justice. It was also cont ended that the Income TAX Appeallate Tribunal, Delhi completely over-looked the evidence on record and ignored the finding of the Income-Tax Officer, and as such the order of the Income Tax Appellate Tribunal was without jurisdic tion. 7. On behalf of the aesessee firm it was contended that the question of law which has now been referred to, was not included in the petition under Section 66(1) of the Act. It was also contended that the Income Tax Appellate Tribunal was fully justified in re assessing the evidence which was led before the Income-tax Officer. It was also contended that the order of the Income Tax Appellate Tribunal suffers from no infirmity, as the evidence on record has been properly appreciated and evaluated. It was also contended that the finding of the Income-tax Officer dated 27.11.1969 looses all its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not follow that the receipt constitutes his taxable income. It would be perfectly legitimate to say that the mere fact that the explanation of the assessee is false does not necessarily give rise to the inference that the disputed amount represents income. It cannot be said that the finding given in the assessment proceedings for determining or computing the tax is conclusive However, it is good evidence. Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. 10. In Jethabhai Hirji Co. v. Commr. of Income Tax, Bombay 27 ITR 533, it has been held that, It is for the High Court alone to indicate to the Tribunal what are the questions of law, and the only function of the Tribunal is, once a requisition is made upon of under Section 66(2), to formulate proper questions which arise out of those questions of law and to state a case which is germane to the questions of law indicated by the High Court. It would then be open to the Hah Court either to answer the que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. There is also no ground for restricting that power when by an erroneous order the High Court has directed the Tribunal to state a case on a question which does not arise out of the order of the Tribunal. At the hearing of a reference pursuant to an order falling upon the Tribunal to state a case the High Court is not bound to answer the question without considering whether it arises out of the order of the Tribunal whether it is a question of law or whether it is academic, unnecessary or irrelevant. Power to reframe a question may be exercised to clarify some obscurity in the question referred, or to pin point the real issue between the taxpayer and the department or for similar other reasons, it cannot be exercised for reopening an enquiry on question of fact or law which is closed by the order of the Tribunal. 15. In Commr. of Income Tax v. Scindia Steam Navigation 42 ITR 589, it has been held as under: Before the High Court the company for the first time raised the contention that the fourth proviso to Section 10(2)(vii) did not apply to the assessment as it was not in force on April 1, 1946, and the liability of the company had to be determined as on April 1, 1946, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne to answer the question referred pursuant to the direction of the High Court, if it did not arise out of the order of the Tribunal or was a question effect or was academic or could not have been raised because it was not incroporated in the application. 17. In Bhanji Bagwandas v. Commer. of Income Tax 67 ITR 18, it was held that where the question referred to the High Court was whether on the facts and in the circumstances of the case, the assessment was saved from the bar of limitation under the second proviso to Section 34(3), on argument of the department raised before the Supreme Court that in answering that question the effect of Section 2 of the Income Tax (Amendment) Act, 1959, must be taken into consideration, was within the frame work of the question referred to the High Court, and it was therefore competent to the Supreme Court to allow that new contention to be raised. 18. On behalf of the non petitioner reliance has been placed on the following case laws : In C.I.T. v. Kaoday (sic) Sons 83 ITR 369, it has been held that the conclusion drawn by the Appellate Tribunal were all on findings of fact recorded against the department and on those findings no question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T. 86 ITR 557, it has been held that on the facts, there was relevant material before the Tribunal to hold that the assessee had deliberately concealed the particulars of his income; there was not a case of inference from mere falsity of the explanation given by the assessee in the assessment proceedings but a case where there were definite findings that a device had been deliberately created by the assessee for the purpose of concealing his income. 22. In C.I.T. v. Mrs. Doris S. Luiz (sic) ITR 646, it was held that the penalty proceedings are distinct from assessment proceedings and are in the nature of quasi, criminal proceedings. Being quasi criminal proceedings the burden is on the department to prove positively concealment of income on the part of the assessee. 23. In C.I.T. v. Kotrika Venkataswamy Sons 79 ITR 499 it has been held that if, on the materials and in the circumstances of the cases, the Appellate Tribunal reaches the conclusion that there was no suppression of sales by the assessee on the facts disclosed and no concealment of income was proved, no case can be referred to the High Court under Section 66(1) of the Income Tax Act, 1922, seeking to upset conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w to this Court. As has been held by their Lordships of the Supreme Court in the cases referred to above, this Court was quite competent to frame a question of law which arose from the pleadings of the parties, and from the order of the Tribunal. Having given our most anxious consideration to this is act of the case, w have no hesitation in holding that the question of law directed to the referred by the Tribunal was within the ambit and jurisdiction to this Court. 26. The assessment proceedings are quite distinct from the penalty proceedings. The penalty proceedings are quasi criminal in nature. A penalty can be imposed only when the assesses has consciously concealed his income, of has deliberately furnished inaccurate particulars, or has adopted a device for the purpose of a deliberate concealment of income, or for escapement from assessment . It is equality evident that an assesses may file an appeal only against the order of imposition of penalty, though he might not have filed any order of assessment. The order of assessing authority is a good piece of evidence , but it is not of a conclusive nature. The appellate Tribunal considered the evidence led by the assessee in th ..... 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