Madhya Pradesh High Court
J.K. Jajoo vs Commissioner Of Income-Tax on 18 August, 1989
Equivalent citations: [1990]181ITR410(MP)
JUDGMENT
G.G. Sohani, Actg. C.J.
1. As directed by this court, the Income-tax Appellate Tribunal, Indore Bench, has referred the following question of law to this court for its opinion :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was guilty of concealing the particulars of his income-and was liable to pay penalty under the provisions of Section 271(1)(c) of the Income-tax Act, 1961 ?"
2. The material facts giving rise to this reference, briefly, are as follows :
3. The assessee is an individual deriving income from business as an agent of the Life Insurance Corporation of India. For the assessment year 1969-70, the assessee disclosed in his return income of Rs. 26,341 claiming expenses amounting to Rs. 18,900. This claim for expenses was not upheld by the Income-tax Officer and the assessment was made on a total income of Rs. 35,988. The Income-tax Officer also initiated penalty proceedings against the assessee ; as the amount of minimum penalty imposable on the assessee exceeded Rs. 1,000, the matter was referred to the Inspecting Assistant Commissioner. After taking into account the explanation of the assessee, the Inspecting Assistant Commissioner held that the assessee was guilty of concealment of income and imposed upon him a penalty of Rs. 9,650. On appeal before the Tribunal, the Tribunal held that the assessee was guilty of concealment and in this view of the matter, the Tribunal dismissed the appeal. Aggrieved by the order passed by the Tribunal, the assessee sought reference but as the application submitted by the assessee in that behalf was rejected, the assessee submitted an application before this court under Section 256(2) Of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), which was allowed and the Tribunal was directed to state the case and to refer the aforesaid question of law to this court for its opinion. That is how the aforesaid question of law has been referred to this court.
4. Now, the finding of the Tribunal that the assessee was guilty of concealment of income is based on the fact that accounts regarding expenses were not properly maintained and that according to the circular issued by the Central Board of Direct Taxes regarding expenses allowable to an insurance agent where detailed accounts regarding expenses incurred by him are not maintained, the assessee was not entitled to deduction of expenses claimed by him. But from the mere fact that a claim for certain expenditure ,is rejected, it cannot be held that the claim for expenditure made by the assessee was false or inaccurate to his knowledge or was as a result of gross negligence. On the facts and in the circumstances of the case, therefore, the Tribunal was not justified in holding that the assessee was guilty of concealing the particulars of his income and was liable to pay penalty under the provisions of Section 271(1)(c) of the Act. Our answer to the question referred to this court is, therefore, in the negative and in favour of the assessee. In the circumstances of the case, parties shall bear their own costs of this reference.