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TMI Blog1979 (5) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... tiated penalty proceedings. As the minimum penalty exceeded Rs. 1,000, the ITO referred the matter to the IAC under s. 274(2) of the I.T. Act, 1961, on November 30, 1964. The IAC, after hearing both the parties, passed an order on February 25, 1965, levying a penalty of Rs. 39,000 on the assessee under s. 271(1)(c) of the I.T. Act, 1961. The assessee preferred appeal, being ITA No. 8348 of 1965-66, to the Income-tax Appellate Tribunal which, by its order, dated November 24, 1967, set aside the order of penalty. In the appeal, two questions were raised; first, penalty under the Act of 1961 did not lie on the facts of the case; and, secondly, even if the penalty could be levied under the Act of 1961, the order was bad because the IAC had not commenced the penalty proceeding before completion of the assessment. The Tribunal held that the assessment having been completed under s. 23(3) of the Indian I.T. Act, 1922, penalty could not be levied under s. 271(1)(c), read with s. 297(2)(g) of the I.T. Act, 1961. Having held so, the Tribunal considered it not necessary to give findings on the other question and also on the merits as to whether the assessee had concealed its income and the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Sri Keshardeo Agarwalla and Sri Ram Narain Sharma were the benamidars of the assessee, and that the assessee was carrying on cloth business in their benami names. It also held that the department had failed to prove that the assessee had concealed any income. The Tribunal accordingly allowed the appeal by its order dated April 29, 1974. The department made an application under s. 256(1) of the I.T. Act, 1961, raising the following three questions: " (i) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal while giving effect to the hon'ble High Court's judgment under section 260(1) of the Income-tax Act, 1961, was justified in considering the case de novo, and on a point which was not the subject-matter of reference to the hon'ble High Court ? (ii) Whether, on the evidence available, the finding of the Tribunal that profits earned in the benami of Keshardeo Agarwalla and Ram Narain Sharma do not belong to the assessee is not perverse; and whether the conclusion of the Tribunal based on conjectures and surmises could reasonably be drawn ? (iii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as : " But it is necessary to give certain effective directions, lest a bald order of dismissal of the appeal may result in injustice, especially when the assessee had not a fair trial of his case before the Tribunal. Section 66(5) of the Indian Income-tax Act, 1922, requires the Tribunal on receiving copy of the judgment of the High Court to pass such orders as are necessary to dispose of the case conformably to such judgment. This clearly imposes an obligation upon the Tribunal to dispose of the appeal in the light of and conformably with the judgment of the High Court. Before the Tribunal passes an order disposing of the appeal, there would normally be a hearing. The scope of the hearing must of course depend upon the nature of the order passed by the High Court. If the High Court has agreed with the view of the Tribunal, the appeal may be disposed of by formal order; if the High Court disagrees with the Tribunal on a question of law, the Tribunal must modify its order in the light of the order of the High Court; if the High Court has held that the judgment of the Tribunal is vitiated, because it is based on no evidence or that it proceeds upon conjectures, speculation or suspi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st, in deciding an appeal, consider with due care all the material facts, and record its findings on all the contentions raised by the parties in the light of the evidence and the relevant law. No doubt, normally, the Tribunal is not to decide only one issue arising out of many issues and decline to go into the other issues raised before it on the ground that further issues will not arise in view of the finding on the issue decided by it. The observation of the Supreme Court in Indian Molasses Co. (P.) Ltd. v. CIT [1959] 37 ITR 66, at page 72, is relevant: " We cannot help saying that though the Tribunal may be at liberty to decide a case as appears best to it, there is considerable hardship to the taxpayers, if questions of law are decided piecemeal and repeated references to the High Court are necessary. The jurisdiction of the High Court is advisory and consultative, and questions of interpretation of law in this attenuated form can well be avoided. This will tend to cut down the duration of litigation." The observation above of the Supreme Court throws a flood of light on this question. To avoid multiplication of proceedings under the Act, it is desirable that the Tribunal sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Tribunal is based on the materials on record. It is well settled that a finding given in the assessment proceedings for determining or computing the taxation is not conclusive, although it is good evidence; and the penalty proceeding being separate and distinct from the assessment proceeding, the assessee is entitled to lead additional evidence to show that the assessee had not concealed its income as to justify imposition of penalty under s. 271(1)(c) of the I.T. Act, 1961. See CIT v. Anwar Ali [1970] 76 ITR 696 (SC) and CIT v. Ashoka Marketing Ltd. [1976] 103 ITR 543 (SC). In arriving at the finding that the assessee had not carried on business benami and had not concealed income, it took into consideration the following circumstances and materials, viz., (a) it could not be doubted that many cloth dealers would be purchasing cloth goods from Begmal & Sons; no circumstances could be shown that the two persons were benamidars of the assessee-firm, as all the three were receiving goods from Begmal & Sons; (b) if the articles were delivered at the shop of the assessee by the postal department, it could not be said that they were delivered to the assessee; the letter to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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