Commissioner of Income Tax vs Smt. Chandradevi

Heard Shri Mukati, learned counsel for the applicant on the question of admission.

This is an application u/s 256(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). The material facts giving rise to this application, briefly, are as follows :

Penalty proceedings were initiated against the petitioner by the Appellate Assistant Commissioner, because the assessee had failed to include in her income the income of her two minor sons, who had been admitted to the benefits of the partnership in three firms, from which the assessee also had derived her income. It was contended before the Appellate Assistant Commissioner on behalf of the assessee that the share income was not earned by the minors in the relevant accounting year and, therefore, the income of the minors could not be clubbed with the income of the assessee while framing the assessment of her income for the assessment year 1976-77. The Appellate Assistant Commissioner overruled this objection and further held that the assessee had rendered herself liable to pay penalty u/s 271(1)(c) of the Act. The Appellate Assistant Commissioner accordingly levied penalty. On appeal by the assessee against the order of the Appellate Assistant Commissioner levying penalty, the Tribunal held that judging the entire conduct of the assessee, it could not be held that the omission of the assessee to include the income of her minor sons was deliberate so as to make her liable to pay the penalty. In this view of the matter, the Tribunal set aside the order of penalty. Aggrieved by that order, the Department, submitted an application before the Tribunal u/s 256(1) of the Act. The Tribunal rejected that application. Hence, the Department has filed this application.

Having heard the learned counsel for the Department, we have come to the conclusion that this application deserves to be rejected. The Tribunal found that the assessee had entertained the bona fide belief that the amount in question was not required to be disclosed in the returns for the assessment year 1977-78. The Tribunal also held that in the circumstances of the case, the omission on the part of the assessee to include the income in question was not deliberate. These are findings of fact and in view of these findings, the order of the Tribunal setting aside the penalty levied on the assessee, does not, in our opinion, give rise to any question of law.

The application is accordingly rejected.