Calcutta High Court
Commissioner Of Income-Tax vs Sardar Iqbal Singh on 13 March, 1989
Equivalent citations: [1991]190ITR51(CAL)
Author: Suhas Chandra Sen
Bench: Suhas Chandra Sen
JUDGMENT Suhas Chandra Sen, J.
1. The following questions of law have been referred to this court by the Tribunal under Section 256(2) of the Income-tax Act, 1961 :
"(1) Whether, on the facts and in the circumstances of the case and in view of the fact that the Explanation to Section 271(1)(c) applies in this case, the Tribunal misdirected itself in law in coming to the finding that no fraud or gross or wilful neglect can be attributed to the assessee in not returning the correct income and whether such finding is otherwise unreasonable and/or perverse?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal is right in cancelling the penalty order passed by the Inspecting Assistant Commissioner under Section 271(1)(c) of the Income-tax Act, 1961?"
2. The assessment year involved in this reference is the assessment year 1967-68 for which the relevant year of account was the year ended on November 30, 1966.
3. The question is about the leviability of the penalty. It was contended on behalf of the Department that there were erasures or mistakes in the account books of the assessee. The Tribunal observed that mere erasures or mistakes would not lead to the conclusion of falsity in the accounts. It further observed that in the assessments the accounts were rejected and the business income was estimated on the basis of past records but no fraud, gross or wilful neglect could be attributed to the assessee in not returning the correct income and thus the penalty order could not be sustained.
4. It has not been shown before us what material the Tribunal has not taken into account in coming to its decision. There cannot be any question of perversity in a case like this. It is not a case of misdirection in law by the Tribunal in coming to the conclusion that mere erasures or mistakes in the accounts could not lead to the inference that the accounts were manufactured.
5. Under the circumstances, question No. 1 is answered in the negative and in favour of the assessee. Question No. 2 is answered in the affirmative and in favour of the assessee.
6. There will be no order as to costs.
Bhagabati Prasad Banerjee, J.
7. I agree.