Commissioner of Income Tax vs Soloman and Co.

The Income Tax Appellate Tribunal (Allahabad Bench), referred the following questions to this court for its opinion : ,

"1. Whether, on the facts and in the circumstances of the case, was there any finding that the explanation submitted by the assessee was believable ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the onus under the Explanation u/s 271(1)(c) has been discharged by the assessee ?

Whether a loss return followed by the assessment order which also computes income in a red figure (namely of loss though of a lesser amount) attracts Section 271(1)(c) read with the Explanation ?"

From a perusal of the order of the Appellate Tribunal it appears that the order of the Inspecting Assistant Commissioner levying the penalty was set aside on the ground that the assessee had successfully discharged the negative burden cast upon it under Explanation 2 to Section 271(1)(c) of the Income Tax Act, 1961. Whether or not the onus under Explanation 2 to Section 271(1)(c) of the Income Tax Act, 1961, was successfully discharged, is essentially a question of fact and the factual finding having been recorded by the Appellate Tribunal on that has to be accepted.

On these facts and circumstances, we answer the above questions in the affirmative, i.e., in favour of the assessee and against the Revenue.

The record of this case be sent down to the Appellate Tribunal to pass an order conformably to our order.