Commissioner of Income Tax vs R. Bharathan (No. 2)

V.V. Kamat, J.—With regard to the same assessee, in O. P. No. 14917 of 1995, we have already called for a reference by the necessary direction with regard to the same assessment year 1983-84. The facts are the same. The question in this petition is whether the provisions of Section 209A of the Income Tax Act get attracted in a situation where initially the assessee shows losses and thereby no taxable income comes to be assessed on the basis of an enormous amount of income found out on the scrutiny of accounts.

The Tribunal has relied upon the decision of the Commissioner of Income Tax (Appeals) with regard to the quantum proceedings whereby the quantum is reduced to Rs. 5 lakhs. On the above basis, the Tribunal has cancelled the penalty proceedings which was the subject-matter of O. P. No. 14917-S of 1985, and, in addition thereto, has come to the conclusion that the provisions of Section 209A of the Act would not be applicable. In our judgment, the questions are questions of law and are required to be considered.

We, therefore, direct the Income Tax Appellate Tribunal to prepare the necessary statement of the case in detail and annex all the necessary orders with regard to the quantum proceedings, penalty proceedings as well as proceedings relating to the conclusion regarding attraction of the provisions of Section 209A of the Act and thereafter refer the following two questions to this court :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that the provisions of Section 209A are not attracted to the facts of this case ?

Whether, on the facts and in the circumstances of the case,

(i) did the assessee have taxable income under the provisions of the Income Tax Act ?

(ii) the Tribunal is right in law and fact in confirming the cancellation of penalty u/s 273(2)(a) of the Income Tax Act ?

(iii) the Tribunal is justified in equating taxable income with returned income."

The two references arising out of both these O. P. Nos. 14917 of 1995 and 15988 of 1995, be placed together for hearing and final decision after receipt.