Commissioner of Income Tax vs Purushottamdas and Others

A.K. Mathur, C.J.—This is an application u/s 256(2) of the Income Tax Act, 1961, at the instance of the Revenue for calling for a statement of case from the Tribunal on the following question of law :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the penalty levied u/s 271(1)(c) even after confirming the unexplained investment in quantum appeal ?"

The assessees'' premises were searched on January 21, 1976, and on the basis of seized material, assessments for the assessment years 1967-68 to 1976-77 were completed. The assessees concealed unexplained investments. The Assessing Officer imposed penalty u/s 271(1)(c) of the Act. Aggrieved by this penalty, the assessees filed an appeal before the Commissioner of Income Tax (Appeals) who confirmed the order of the Assessing Officer. Hence, the assessees approached the Tribunal and the Tribunal after considering the matter allowed the appeal of the assessees and set aside the penalty. While disposing of the appeal, the Tribunal observed that in order to justify levy of penalty, there has to be some material or circumstances leading to the reasonable conclusion that the amount represented the income of the assessee of the particular assessment year. It was also observed that there cannot be levy of penalty as a matter of course. Accordingly, the Tribunal set aside the penalty for all the ten assessment years.

We have gone through the matter and we are of the opinion that levy of penalty is a discretionary order and the Tribunal has exercised its discretion setting aside the penalty after satisfying itself that there was no conscious concealment on the part of the assessees. No question of law arises in this case to call for the statement of the case from the Tribunal. Consequently, this application u/s 256(2) of the Act is rejected.