1972 (5) TMI 2

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... and in favour of the assessee
Judge(s) : P. GOVINDAN NAIR., P. SUBRAMONIAN POTI. JUDGMENT The judgment of the court was delivered by SUBRAMONIAN POTTI J.-The reference before us is under section 256(1) of the Income-tax Act, 1961, and the question referred by the Income-tax Appellate Tribunal, Cochin Bench, is : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in cancelling the order of penalty passed by the Inspecting Assistant Commissioner under section 271(c) read with the Explanation thereto ? " The assessee is a firm of two partners. This firm took over the business of another firm in which the partners of the assessee-firm were also partners. The business was one of processing and .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... Income-tax Appellate Tribunal which, by its order, cancelled the imposition of penalty and directed the Income-tax Officer to refund the penalty amount. The Tribunal, in paragraph 6 of its order, found thus : " After having heard the parties we are not satisfied that the under-statement of income was due to any fraud or any gross or wilful neglect on the part of the assessee. The assessee has merely adopted a method of valuation followed by the predecessor firm and accepted by the department." Section 271(1)(c), together with the Explanation, reads as follows : " 271. (1) If the Income-tax Officer or the Appellate Assistant Commissioner, in the course of any proceedings under this Act, is satisfied that any person ... (c) has conceale .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... bunal has found that the assessee had discharged the onus of proving this. That the firm from which the assessee had taken over the business had been adopting the same method of valuing the closing stock as employed by the assessee had been found by the Tribunal. That this method has been accepted by the department is also found in the order of the Tribunal. This circumstance has been found to be sufficient to warrant the inference that there could not have been any fraud or gross or wilful neglect on the part of the assessee. We see no reason to come to a different conclusion on the facts. To our mind, it appears that the assessee could not have been guilty of fraud or gross or wilful neglect if he was only adopting the same method of acc .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X