Commissioner of Income Tax vs Dr. H.N. Mehrotra

This is an application u/s 256(2) of the income tax Act, 1961 (''the Act'') by the Commissioner, Agra, requesting this Court to refer the Tribunal for referring following questions of law which arise out of the Tribunal''s order dated 9-4-1992:

Whether the Tribunal was justified in deleting the penalty levied u/s 271(1)(c) without considering the fact that the assessee has not brought on record full material maintained by him in the shape of sale register which was necessary to compute his professional income ?

Whether the Tribunal, while deleting the penalties levied u/s 271(1)(c), was justified in law to ignore the material fact that income from house property and agriculture belonged to the assessee but not shown in the returns of income, was an attempt on the part of the assessee to conceal the income ?

This fact is not disputed that the assessee is a private practitioner and derives income from his practice as well as from his ancestral agricultural landed property (HUF) and also from house rents from the assessment years 1977-78 to 1980-81, 1984-85 and 1985-86. The assessment was made for the first time of subsequent years also and the petitioner has disclosed his income derived from different sources. The Tribunal by its impugned order dated 9-4-1992 contained in Annexure 3 to the petition, arrived at the finding that the petitioner has disclosed to the department the income from all sources, and the Tribunal has reached positive finding to the effect that the petitioner has not concealed any income from any source from the Assessing Officer and, thus, the explanation furnished by the assessee is substantiated and, therefore, no question of penalty within the meaning of section 271(1)(c) of the Act arises.

The learned counsel appearing for the petitioner vehemently con tended that when the notice of penalty was issued u/s 271(1)(c), it was incumbent upon the assessee in view of assessing clause to disclose the income. When the alleged notice was issued, the petitioner did not disclose the income from all the sources as required under the Explanation clause and, thus, the questions of law referred to above do arise out of Tribunal''s order dated 9-4-1992.

The learned counsel in support of his contention has relied upon Addl. Commissioner of Income Tax Vs. Lakshmi Industries and Cold Storage Co. Ltd., wherein their Lordships of this Court considered the Explanation to section 271(1)(c) and held that the Tribunal''s approach was erroneous in regard to the addition of Rs. 50,000 and that the Tribunal had not recorded any finding that the failure on the part of the assessee to return the same was not on account of any fraud or any gross or wilful neglect on its part. The assessee had also offered no explanation with regard to Rs. 31,500 out of the sum of Rs. 41,500 added on account of cash credits. The important feature of this case is that on the facts found, the inference of the Tribunal that these amounts had been added as the evidence had been found unsatisfactory, was not correct. Penalty was exigible and the Tribunal was not justified in cancelling the penalty.

Thus, in the case of Lakshmi Industries & Cold Storage Co. Ltd (supra) on facts, it was found that in view of Explanation added to section 271(1)(c) the petitioner had not explained and disclosed the income. Such is not the case in the instant case. In the instant case, the Tribunal had arrived at the finding vide para 8 of the order that the petitioner at every stage has disclosed his income from all the sources which is a finding of fact and in view thereof the case of Lakshmi Industries & Cold Storage Co. Ltd. (supra) has no application in this case.

In our considered opinion, no question of law arises to refer the matter to the Tribunal for framing the law and referring to this Court. The reference, thus, has no merit and is dismissed. The decision in this case will also govern income tax Application Nos. 133 of 1993 and 134 of 1993 and they also stand disposed of by this judgment since common questions of law arise in all these cases.