Allahabad High Court
Additional Commissioner Of Income-Tax vs Chhotey Lal Radhey Shyam on 30 January, 1991
Equivalent citations: [1991]190ITR316(ALL)
Author: B.P. Jeevan Reddy
Bench: B.P. Jeevan Reddy
JUDGMENT
1. Under Section 256(2) of the Income-tax Act, 1961, the following question has been stated by the Income-tax Appellate Tribunal, Allahabad Bench:
"Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in cancelling the penalty of Rs. 15,000 imposed by the Inspecting Assistant Commissioner under Section 271(1)(c) read with its Explanation ?"
2. For the assessment year 1968-69, the assessee filed a return disclosing a turnover of Rs. 53,696 whereupon he showed a gross profit of 5%. Certain slight additions were made to the income so disclosed. There was also an addition of Rs. 7,300 as profit under Section 41(2) of the Income-tax Act. Though this transaction was not disclosed in the return, the assessee filed a revised return disclosing the said item, after the very first hearing and before the assessment was completed. The Income-tax Officer determined his income at Rs. 20,070.
3. Proceedings were then taken under Section 271(1)(c) for levying penalty. The Inspecting Assistant Commissioner levied a penalty of Rs. 15,000 which, in appeal, the Tribunal deleted.
4. It is evident from the order of the Tribunal that the difference between the assessed income and returned income arose because of certain additions made and also on account of certain disallowances made. Another factor was the addition of Rs. 7,300 as profit under Section 41(2). The Tribunal held and, in our opinion rightly, that merely because there is a difference between the returned income and assessed income, penalty ought not to be levied. Even with respect to the item of Rs. 7,300, the Tribunal has given a valid reason. It is true that the Tribunal has made certain observations with respect to burden of proof but they do not constitute the core of its reasoning. We are satisfied that the Tribunal's decision on merits is perfectly in order. It cannot be said that its decision is incorrect in law on any ground. Even the Explanation appended to Section 271(1)(c) which was in force at the relevant time does not come to the rescue of the Revenue, for herein the several reasons given by the Inspecting Assistant Commissioner for imposing penalty have been clearly dealt with and negatived by the Tribunal.
5. Accordingly, the question referred is answered in the affirmative, that is, in favour of the assessee and against the Revenue.