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TMI Blog1976 (12) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... section 271(1)(c) of the Act ? " The relevant assessment year is 1964-65 corresponding to the previous year ending on March 31, 1964. The Income-tax Officer included the following items as the assessee's income though the same had not been returned : Rs. (i) Salary 8,500 (ii) Income from property 14,050 (iii) Dividend on shares in the name of the assessee's wife 22,650 (iv) Dividend on shares in the name of the assessee's minor son 2,484 (v) Income from undisclosed sources as cash credit 51,000 (vi) Income from undisclosed sources used for personal expenses 20,300 (vii) Capital gains (Rs. 30,400) 30,400 Penalty proceedings under section 271(1)(c) of the Act were initiated and the Inspecting Assistant Commissioner, after hearing the assessee's explanation, imposed a penalty of Rs. 60,000. Assessee appealed to the Appellate Tribunal and contended that there was no deliberate concealment of income. It was further maintained on behalf of the assessee that in regard to salary income the assessee had surrendered it to the National Defence Fund and was, therefore, under the belief that it was not necessary to disclose the salary in the return. With regard to the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to state a case with reference to alleged suppressions in the matter of. salary income, dividend income and the alleged income from undisclosed sources relating to personal expenses and required the Appellate Tribunal to state a case with reference to the remaining three items as already indicated. Learned standing counsel strenuously contended that the Bench hearing the matter at the final stage is not bound by the view expressed at the preliminary hearing and as a question of law did arise in regard to the other items, we should now require the Appellate Tribunal to draw up an additional statement in regard to the items which have been excluded. In support of his contention, he places reliance on the well known Full Bench decision of the Lahore High Court in the case of Seth Gurmukh Singh v. Commissioner of Income-tax [1944] 12 ITR 393, on a decision of the Andhra Pradesh High Court in the case of Commissioner of Income-tax v. G. M. Chennabasappa [1959] 35 ITR 261 and a decision of the Supreme Court in the case of Lakshmiratan Cotton Mills Ltd. v. Commissioner of Income-tax [1969] 73 ITR 634. There is no dispute about the proposition, that correctness of an order of the High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne to indicate to the Tribunal what are the questions of law, and the only function of the Tribunal is, once a requisition is made upon it under section 66(2) to formulate proper questions which arise out of those questions of law and to state a case which is germane to the questions of law indicated by the High Court. It would then be open to the High Court either to answer the questions as formulated by the Tribunal or, if the High Court feels that the questions are not properly raised, to reframe the questions or modify the questions, and answer those questions as reformulated or modified." Learned standing counsel has not asked for reframing or modification of the question. At the preliminary hearing, this court came to hold that no question of law arose in regard to the items which were omitted. The effect of that order really is that the application by the revenue for stating a case with regard to those questions was not entertained. Reviving matters which are closed cannot come within the ambit of reframing the question or making a suitable modification so as to bring the true dispute into the picture. Dispute arose with regard to different items for the purpose of impositio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted by the Inspecting Assistant Commissioner but it appealed to the Appellate Tribunal. The alleged cash credit is to the tune of Rs. 51,000. As already noted, the assessee purchased a house at Aurangazeb Road, New Delhi, and for that purpose Rs. 51,000 had been paid as advance to the owner. This payment of advance had not been debited in the assessee's books of account. It was stated that a cheque for Rs. 51,000 had been received from one F.C. Mehra and that very cheque had been endorsed to the vendor. Mehra was paid back Rs. 5 1,000 also by cheque. There is no dispute that Mehra had issued a cheque which had been endorsed in favour of the vendor, nor is there any dispute that Mehra had been paid for through bank. A sum of Rs. 51,000 lay in deposit in the account of Mehra. The Inspecting Assistant Commissioner required the assessee to establish the source of the cash deposit in Mehra's account, because the Income-tax Officer had taken the view that the deposit may have been made by the assessee himself. For the conclusion of the Income-tax Officer, admittedly, there was no material and at the most there could be scope for suspicion. A bare suspicion, however, is no foundat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no deliberate defiance of law and the conduct is not contumacious or dishonest, it is open to the statutory authority to waive imposition of penalty. Even if a minimum penalty is prescribed, it is open to the authority competent to impose the penalty to refuse to impose penalty, particularly where the default flows from a bona fide belief that the assessee had not to act in a particular way. It is not disputed that the Tribunal was competent to exercise the same power as the penalty imposing authority and, therefore, when taking into consideration the broad features of a given case, the Tribunal comes to conclude that no penalty is exigible, no question of law can be said to arise. Having given our anxious consideration to the matter, our answer to the question referred to us, therefore, is : On the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not liable to be visited with penalty in respect of a sum of Rs. 14,050 representing income from house property, a sum of Rs. 5 1,000 said to be income from undisclosed sources and a sum of Rs. 30,400 said to be capital gains. We direct both parties to bear their own costs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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