Commissioner of Income Tax vs Prominent Road Carriers (P.) Ltd.

By this petition u/s 256(2) of the income tax Act, 1961 (''the Act''), the revenue seeks a direction to the Tribunal to state the case and refer the following question, in respect of the assessment year 1983-84, for the opinion of this Court: Whether, the Tribunal was justified in holding that the penalty u/s 271(1)(c) was not leviable even though the genuineness of investment towards share application remained unproved ?

Having heard the learned counsel for the revenue, we are of the view that reference on the proposed question need not be called for.

While confirming the order passed by the Commissioner (Appeals), deleting the penalty of Rs. 49,970 levied by the Assessing Officer, u/s 271(1)(c) of the Act on account of alleged failure on the part of the assessee to furnish a satisfactory explanation with regard to the share application money, reflected in its books of account, the Tribunal has held as follows :

The Explanation 1 to section 271(1)(c) clearly indicates that where an assessee offers an explanation and substantiated the same, which in the present case has been substantiated by producing the affidavits of all the depositors, the onus shifts on the Assessing Officer to prove that the explanation so submitted by the assessee is false. The Assessing Officer has not brought any material on record to prove that such explanation furnished by the assessee which was substantiated by producing the affidavits of the concerning persons was false. The Assessing Officer did not even require the assessee to produce those persons whose affidavits have been submitted. Those affidavits cannot be brushed aside, simply by observing that such affidavits are self-serving statements. The affidavits have been given not by the assessee, but all the depositors have confirmed the fact on oath clearly stating in the affidavits that they have given the respective amounts to the company by way of share application money. On the facts and circumstances of the present case, the assessee had adequately discharged the burden of proving that the disputed amount of additions do not in fact represent the real income of the assessee but the amount in question was given by way of share application money by the respective shareholders.

[Emphasis Supplied]

Thus, on the basis of the material available before it, the Tribunal has found that the assessee has proved that the disputed amount of addition does not represent its income. This pure finding of fact is not sought to be challenged by the revenue as perverse in the proposed question. In the absence of such a challenge, answer to the proposed question is self evident. In this view of the matter, the proposed question cannot be said to be a question of law fit for reference to this Court. The petition is, accordingly, dismissed.