1988 (6) TMI 26

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..... section 256(2) of the Income-tax Act, 1961, for the assessment year 1974-75 : "1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the penalty order passed by the Inspecting Assistant Commissioner cannot be sustained on the sole ground that the Tribunal has deleted the addition of Rs. 4 lakhs made by the Income-tax Officer in the quantum appeal, .....

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..... s. 4 lakhs were sent to one Shri Shaligram Chowdhury of Bombay by telegraphic transfer on October 30, 1950 through Hindusthan Mercantile Bank. The said Shaligram Chowdhury, in his turn, paid over Rs. 4 lakhs to G. Yafi Sons of Bombay which, in turn, paid the said amount to Madaripur Trading Co. Ltd. in cash." According to the Income-tax Officer, as the payment of Rs. 4 lakhs ill cash to Madar .....

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..... anation regarding the mode of payment of Rs. 4 lakhs to Madaripur Trading Co. Ltd. and, accordingly, he treated Rs. 4 lakhs as the assessee's income from undisclosed sources. Simultaneously, he initiated proceedings under section 271 ( 1 ) (c) of the Act and referred the matter to the Inspecting Assistant Commissioner as the minimum penalty imposable under that section exceeded Rs. 1,000. Thereaft .....

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..... s of account and not two transactions as alleged by the Revenue. The Tribunal, therefore, deleted the addition of Rs. 4 lakhs made by the Income-tax Officer as the assessee's income from undisclosed sources. As the Inspecting Assistant Commissioner had imposed a penalty of Rs. 4,50,000 under section 271(1)(c) only on the basis of the addition of Rs. 4 lakhs made by the Income-tax Officer and si .....

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..... of account and not two transactions as alleged by the Revenue. Those findings have not been challenged. In our view, the Tribunal was right in cancelling the order of penalty passed under section 271 ( 1 ) (c) of the Income-tax Act. In the premises, both the questions referred to this court are answered in favour of the assessee and against the Revenue. There will be no order as to costs. .....

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