Hope Textiles Ltd. vs Commissioner of Income Tax

G.G. Sohani, Actg.C.J.

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 :

For the assessment year 1974-75, penalty was imposed on the asses-see u/s 221 of the Act. Aggrieved by the order passed by the Income Tax Officer imposing penalty, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The appeal was partly allowed by reducing the amount of penalty. On further appeal before the Tribunal, the amount of penalty was further reduced. Aggrieved by the order passed by the Tribunal, the assessee sought reference but the application submitted by the assessee in that behalf was rejected. Hence, the assessee has filed this application.

Learned counsel for the assessee contended that the Tribunal was not justified in holding that the assessee was in default when the application for stay submitted by the assessee u/s 220(6) of the Act was pending before the Income Tax. Officer, and, hence, a question of law arose in this case as to whether the Tribunal was right in law in holding that imposition of penalty u/s 221 of the Act was justified, when the application for stay was pending. On behalf of the Revenue, it was contended that the question of law sought to be referred was not urged before the Tribunal and, hence, it could not be held that the said question arises out of the order passed by the Tribunal.

Having heard learned counsel for the parties, we have come to the conclusion that the application deserves to be rejected. Learned counsel for the assessee contended that it was stated in the memorandum of appeal that the Income Tax Officer could not levy penalty without deciding the application for stay; but there is no material on record for holding that the said ground was urged by the assessee before the Tribunal. Moreover, the Commissioner of Income Tax (Appeals) has observed that the Income Tax Officer had clearly rejected the request for a stay of the demand in these circumstances, the question of law now sought to be referred cannot be held to arise out of the order passed by the Tribunal. The application, therefore, deserves to be rejected.

The application is accordingly rejected. In the circumstances of the case, the parties shall bear their own costs of this application.