Commissioner of Income Tax vs S.V. Enterprise

J.P. Devadhar, J.—This application filed by the Revenue u/s 256(2) of the Income Tax Act, 1961, was admitted on April 15,1998, on the following questions of law.

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in sustaining the order of the Commissioner of Income Tax (Appeals) in cancelling the penalty levied by the Assessing Officer u/s 271(1)(c) of the Act?

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in holding that there was no evidence on record to prove that at any stage the Department made any attempt to prove that the amount offered for taxation was concealed income of the assessee?

The assessment year involved herein in the assessment year 1984-85.

The assessee was dealing in iron and steel articles and had effected sales to the sister concern amounting to Rs. 2,91,625. There was a search action initiated at the residential and business premises of the assessee on June 27, 1985, wherein admittedly no books were seized from the assessee. However, at the business premises of the sister concern of the assessee certain books were found wherein it was noticed that the assessee had made sales of iron and steel amounting to Rs. 2,91,625 to the sister concern. As the assessee could not furnish complete availability of funds, the assessee filed return of income on December 30, 1985, by offering to tax the said amount of Rs. 2,91,625. The Assessing Officer passed the assessment order accepting the return filed by the assessee and levied penalty u/s 271(1)(c) of the Act, by invoking Explanation 3 thereto.

On being aggrieved by the aforesaid order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), who deleted penalty, inter alia, on the ground that the assessee had filed the return voluntarily within the period of limitation specified u/s 153(1)(a)(iii) of the Act and no notice under Sections 139(2) and 148 of the Act were issued to the assessee till the expiry of the above period of limitation.

Being aggrieved by the aforesaid order, the Revenue filed appeal before the Income Tax Appellate Tribunal and the Tribunal upheld the order passed by the Commissioner of Income Tax (Appeals). As the reference application filed by the Revenue u/s 256(1) of the Act was rejected by the Tribunal, the Revenue has filed the present application u/s 256(2) of the Act.

In this case, admittedly, during the course of search no books of account were seized from the assessee. No notice u/s 148 or 139(2) of the Act was issued to the assessee. The Departmental representative had admitted before the Tribunal that Explanation 3 to Section 271(1)(c) of the Act is not applicable to the facts of the present case. In these circumstances, rejection of reference application filed by the Revenue on the ground that there is no evidence on record to prove that there is concealment of income, cannot be faulted.

In this view of the matter, in our opinion the Tribunal was justified in holding that there was no referable question of law. Application is accordingly dismissed. Rule discharged. No cost.