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TMI Blog2005 (2) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... pany in liquidation, who is an officer of the court and is a 'public servant', while filing the return of income of the assessee-company in liquidation acted in a bona fide manner and in good faith, which necessarily implies the absence of any fraud, gross or wilful negligence and was right in holding that there is no justification in sustaining the penalty levied under section 271(1)(c) on the basis of such return of income furnished by the official liquidator?" The assessment year is 1975-76 and the relevant accounting period is the year ended on September 30, 1974. The assessee-company-M/s. Poly Steels (India) Ltd. (now in liquidation), was incorporated on January 27, 1970, as a private limited company under the Companies Act, 1956, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved the company court seeking stay of income-tax proceedings till the legal position became clear. Subsequently, it appears that, on February 13,1980, a return of income was submitted showing a total income of Rs. 7,74,428 accompanied by a note stating, that the official liquidator is not competent to sign and verify the return of income of the company in liquidation. The assessment was completed at a total income of Rs. 29,92,540 on August 31, 1982. In the assessment order, a sum of Rs. 14,05,339 was added in respect of value of finished goods removed in a clandestine manner and not accounted for in the books of account maintained by the company. The Assessing Officer also initiated penalty proceedings under section 271(1)(c) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n cancelling the penalty levied under section 271(1)(c) of the Act. As can be seen from the impugned order of the Tribunal, after narrating the facts in detail, the Tribunal has come to the conclusion that the date of default for the purposes of levy of penalty under section 271(1)(c) of the Act is the date on which the return of income was submitted. That on the said day, namely, when the official liquidator submitted the return for the assessment year under consideration, there is no material or evidence on record to show that the official liquidator had concealed or furnished any inaccurate particulars of income arising out of any fraud or gross or wilful neglect. The Tribunal has drawn a presumption that it would be more reasonable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has cheated not only Government, but the public shareholders also." Once this finding was recorded in the light of the facts on record, it was not open to the Assessing Officer to impose penalty for concealment and/or furnishing inaccurate particulars of income by resorting to the Explanation to section 271(1)(c) of the Act on the official liquidator of the company in liquidation. Therefore, the Tribunal was perfectly justified in law in deleting penalty levied under section 271(1)(c) of the Act.
There being no infirmity in the impugned order of the Tribunal, the question referred is answered in the affirmative, i.e., in favour of the assessee and against the Revenue. There shall be no order as to costs. X X X X Extracts X X X X X X X X Extracts X X X X
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