COMMISSIONER OF INCOME TAX Vs. GOVINDANKUTTY MENON T

JUDGEMENT

(1.) THE Revenue has filed this original petition under Section 256(2) of the Income-tax Act, 1961. THE respondent herein is an assessee to income-tax. THE matter relates to the levy of penalty under Section 271(1)(c) of the Income-tax Act for the assessment year 1975-76. In this original petition, the Revenue prays for the issue of a direction to the Income-tax Appellate Tribunal to refer certain questions of law formulated in para 10 of the original petition which, according to it, arise out of the appellate order passed by the Income-tax Appellate Tribunal dated March 6, 1986.

(2.) WE heard counsel for the Revenue, Mr. P.K.R. Menon, as also counsel for the respondent-assessee. The assessee was a partner in a firm which was doing Abkari business. The first assessment year for the firm was 1975-76. On going through the records of the firm, it turned out that the assessee has advanced a loan of Rs. 4,39,890 to the firm. The respondent/assessee was asked to explain. He stated that a sum of Rs. 2,85,000 was derived by way of income from agricultural properties belonging to him, his wife and his mother, and a sum of Rs. 1,60,000 was obtained by way of loan from several persons. The Income-tax Officer did not accept the savings out of the agricultural income to the tune of Rs. 1,00,000. The loans from various persons to the extent of Rs. 95,000 were also treated as unexplained. This resulted in an addition of Rs. 1,95,000 in the assessment. In the quantum appeal, the Commissioner of Income-tax (Appeals) confirmed the addition of Rs. 1,00,000 being the unexplained portion of the agricultural income. The addition of Rs. 95,000, representing loans from various persons, was deleted. The assessee as well as the Revenue filed appeals before the Appellate Tribunal. In I. T. A. No. 475/Coch/1979, the Appellate Tribunal, by order dated September 30,1981, held that two loans amounting to Rs. 45,000 (Rs. 15,000 in the name of Sri. Rama Varma Kochunni Thampuran and Rs. 30,000 in the name of Shri. P.C. Raman Unni) were not satisfactorily proved as also the addition in respect of the agricultural income to the extent of Rs. 40,500 as against Rs. 1,00,000 sustained by the Commissioner of Income-tax (Appeals). In the result, the Appellate Tribunal upheld the addition of Rs. 85,500 in the quantum appeal.

(3.) THE Revenue filed an application under Section 256(1) of the Act to refer certain questions of law which, according to it, arose out of the appellate order of the Tribunal. THE Appellate Tribunal held, that in disposing of the appeal filed by the Revenue, it adverted to Section 271(1)(c) of the Act along with the Explanation and after considering the entire facts and materials on record, held that the assessee has discharged the burden cast on him and in this view of the matter, it is for the Revenue to prove by positive material that the assessee has consciously concealed his income so as to attract the penal provisions of Section 271(1)(c) of the Act which was not done in this case. In the above perspective, the Tribunal confirmed the order passed by the Commissioner of Income-tax (Appeals). Since the finding given by the Tribunal is purely a finding of fact, the questions proposed by the Revenue are not referable questions of law, but are only questions of fact. THE application filed by the Revenue was dismissed. It is thereafter that the Revenue has filed this original petition under Section 256(2) of the Income-tax Act.