2001 (8) TMI 30

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..... to the conclusion arrived at by the Tribunal in the appeals against the assessments, the Tribunal was justified in cancelling the penalties imposed on the assessee for the assessment years 1963-64, 1965-66 and 1966-67?" The dispute relates to the assessment years 1963-64, 1965-66 and 1966-67. The factual position in a nutshell is as follows: S. Sohan Singh, the assessee, is an individual. The previous year in respect of each of the assessment years concerned ended on March 31, 1963, March 31, 1965 and March 31, 1966, respectively. Assessments were reopened by the Income-tax Officer (in short 'the ITO") under section 147 of the Act on the ground that the income had escaped assessment. After reopening of the assessment in each of the year .....

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..... The Income-tax Officer, before the completion of reassessment, issued show-cause notices to the assessee to show cause why penalty should not be levied under section 271(1)(c) of the Act. In the penalty proceedings, the Inspecting Assistant Commissioner ("the IAC in short) informed the assessee about the requirements of the Explanation to section 271(1)(c), indicating that the said provision was applicable to the facts of the case. The assessee was required to show cause why penalty should not be imposed on the assessee under that provision. In reply, the stand of the assessee was that penalty proceedings were independent of the assessment proceedings and simply because assessment orders have been passed in the case of the firm considering .....

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..... ed. If no explanation is offered or the explanation offered is found to be untenable or unacceptable, the Assessing Officer may, considering the background facts, impose penalty if he comes to the conclusion that fraud, gross or wilful negligence was involved. That finding would be essentially one of facts and if the finding is factual as recorded by the Tribunal obviously no question of law arises. But when the conclusion is arrived at by ignoring relevant material or where irrelevant material is taken into consideration, a question of law arises. From the order of the Tribunal it appears that great emphasis was laid on the fact regarding grant of registration to the firm. We find from the orders passed by the Tribunal relating to the asse .....

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