COMMISSIONER OF INCOME TAX Vs. T. ASHOK PAI

JUDGEMENT

(1.) AT the instance of the Revenue, the Income Tax Appellate Tribunal, Bangalore Bench, (the "Tribunal" for short) has referred the statement of the case and the question of law arising out of the order of the Tribunal dated July 25, 1994 in I.T.A. No. 880/Bang/1992 for our consideration and opinion.

(2.) THE question referred reads as under: Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that penalty under Section 271(1)(c) was not exigible in the present case ?

(3.) SUBSEQUENT to the rejection of the petition by the Settlement Commission, the assessee filed a revised return of income on November 23, 1990, before the assessing authority admitting an income of Rs. 4,92,880. The assessing authority concluded the assessment vide order of assessment dated December 19, 1990, accepting the admitted income declared by the assessee. In the course of assessment process, the assessing authority noticed that the assessee had concealed the particulars of income in the original return filed on March 30, 1988, declaring loss. Accordingly, the assessing authority initiated penalty proceedings under Section 271(1)(c) by issuing notice under Section 274 of the Act. The assessee filed his reply on March 1, 1991, inter alia contending, that he is an engineering graduate and not conversant with the tax and financial laws and therefore appointed M/s. Syndicate Bank : Law and Agency, Division to look after the tax matters. The assessee was under the impression that his power of attorney holders being a nationalised bank, they will definitely act in a responsible manner and signed all the papers prepared in good faith and without any intention to evade tax. The omission to declare the correct income is due to the sole and irresponsible behaviour of the officials of the Law and Agency Department of M/s. Syndicate Bank. The assessee further contends that he never had any intention to conceal the income or give any inaccurate particulars in order to evade tax.