COMMISSIONER OF INCOME TAX Vs. N S BABU

JUDGEMENT

(1.) THIS is an appeal filed by the CIT Thiruvananthapuram against the order of the Tribunal, Cochin Bench in C.O. No.41/Coch/1999 in ITA No. 682/Coch/1995 cancelling the penalty under Section 271(1)(c) of the Income -tax Act, 1961, for short the Act'. While admitting the appeal notice was ordered on the following questions of law :

(2.) THE brief facts necessary for the purpose of this case is as follows : The respondent -assessee is an individual deriving income mainly from the proprietary business, in the name of M/s Bharathy Clays and M/s Bharathy Earth Engineering Contractors. For the asst. yr. 1989 -90, the assessee filed a return showing a loss of Rs. 4,685. The AO issued a notice to the assessee stating that he proposes to complete the assessment ex pane on an income of Rs. 40 lakhs since the assessee did not respond to the various notices. The assessee then filed a reply stating that the two items appearing in the schedule of advances totalling Rs. 40,413 shown as advance in the name of Kalpaka Finance, Thiruvananthapuram is actually interest received from that concern and another sum of Rs. 1,28,335 shown as advance in the name of Travancore Cements Ltd., Kottayam was not really outstanding this year since supplies relating to this advance were made during the relevant assessment years. The assessment was completed under Section 143(3) of the Act. In addition to Rs. 1,68,748 so offered the AO made an addition of Rs. 43,499 by way of advance out of the business promotion expenses.

(3.) SRI . P.K.R. Menon, senior counsel, (Government of India) Taxes, appearing for the appellant submits that in the instant case the Tribunal was not justified in entertaining the cross -objection filed by the assessee beyond the time prescribed therefor in the Act. The senior counsel submits that the Tribunal had wrongly cast the burden of establishing that penalty under Section 271(1)(c) of the Act is exigible on the Revenue, The senior counsel in support of his case relied on the decisions of the Supreme Court in CIT v. A. Sreenivasa Pai : [2000]242ITR29(Ker) , K.P. Madhusudhanan v. CIT : [2001]251ITR99(SC) and the decision of the Division Bench of this Court in the judgment in IT Ref. No. 42/1999 and other decisions in ITO v. Late C.D. Joseph and Kerala Chemicals and Proteins Ltd. v. CIT : [1999]235ITR467(Ker) .