Commissioner Of Income Tax vs Moti Lal Sharma
1995 Latest Caselaw 180 Del

ORDER

Dr. M.K. Sharma, J.

1. In this petition under s. 256(2) of the IT Act, 1961 (hereinafter referred to as the Act) the Revenue seeks a direction to the Tribunal to refer the following question of law for the opinion of this Court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in cancelling the penalty imposed under s. 271(1)(c) of the IT Act, amounting to Rs. 9,91,153?"

2. The assessee filed a return of income of Rs. 1,69,153 for the asst. yr. 1987-88 which was accepted as such by the ITO under s. 143(1) of the Act. Subsequently the Assessing Officer came to learn that the assessee had during the relevant previous year ending on 31st March, 1987, received a sum amounting to Rs. 21,00,000 from his employers for rendering valuable services to them for getting enhanced compensation under the Land Acquisition Act, 1894. Accordingly, action under s. 147(a) was taken and the aforesaid amount of Rs. 21,00,000 was added to the income of the assessee after conducting an enquiry to that effect.

3. During the course of the aforesaid assessment proceedings the Assessing Officer being satisfied that the assessee had concealed his income to the extent of Rs. 21,00,000, issued a show-cause notice to the assessee and finally a penalty order under s. 271(1)(c) was made. The assessee being aggrieved filed an appeal against the penalty imposed, before the CIT(A) who upheld the penalty holding that since the assessee did not declare the income of Rs. 21,00,000 in his return filed he was guilty of concealment of income. In the quantum assessment in the meantime the addition made by the ITO of an amount of Rs. 21,00,000 to the income of the assessee came to be deleted by the Tribunal, on an appeal being filed by the assessee, holding the same to be a gift to the assessee by his employers against which an application under s. 256(1) was preferred before the Tribunal. The said application filed under s. 256(1) of the Act having been rejected by the Tribunal the Revenue preferred a petition before this Court under s. 256(2) of the Act which was registered and numbered as ITC No. 1 of 1994. This Court after hearing the learned counsel for the parties has passed an order directing the Tribunal to refer the question formulated in the said petition under s. 256(2) of the Act to this Court along with the statement of the case.

4. The assessee being aggrieved by the order of the CIT(A) upholding the penalty imposed under s. 271(1)(c) of the Act filed an appeal before the Tribunal. When the aforesaid matter came up for hearing before the Tribunal, the quantum appeal was already decided by the Tribunal as aforesaid, and the amount was deleted by the Tribunal in the quantum assessment. In view of the aforesaid factual position the Tribunal cancelled the penalties imposed in view of the fact that the basis on which penalties were imposed had already been deleted by the Tribunal in the quantum assessment and directed the Assessing Officer to refund the amount of penalty in case the same had been recovered. The Revenue being aggrieved filed a petition under s. 256(1) seeking reference of the question of law quoted hereinabove before the Tribunal which was dismissed by the Tribunal on the ground that the findings recorded by the Tribunal were one of fact and no question of law arose. Hence this application.

5. We find from the order of the Tribunal that it was persuaded to cancel the penalties imposed on the ground that the basis on which the penalties were imposed had been deleted by the Tribunal in quantum assessment. However, by our judgment in ITC No. 1 of 1994 delivered today we have directed the Tribunal to refer the question of law arising out of the order of the Tribunal for the opinion of this Court with a statement of case. In view of the facts and circumstances of the case and in view of our judgment and order calling for a reference on the quantum appeal to refer to this Court a statement of case on the question of law framed therein, we are of the opinion that a question of law does arise in this case and accordingly we direct the Tribunal to refer to this Court the question formulated in para 1 of the petition under s. 256(2) of the IT Act and quoted hereinabove for the decision of this Court along with the statement of the case. The petition is thus disposed of.