COMMISSIONER OF INCOME TAX Vs. MAULANA TEA COMPANY

JUDGEMENT

(1.) Accepting revenue's prayer for a reference in terms of S.256(1) of the Income Tax Act, 1961 (in short the Act), Income Tax Appellate Tribunal, Cochin Bench (in short, the Tribunal) has referred the following questions for the opinion of this Court:

(2.) Factual background, as set out in statement of case, is almost undisputed and is as follows: For assessment year 1985-86, assessee filed return of income on 31.3.1987 declaring total income of Rs. 2,25,000/-. Return was filed under the 'amnesty scheme'. Income declared was on estimated basis on a turnover of Rs. 2,69,32,671/-. Assessment was completed on a total income of Rs. 2,50,000/-. As turnover had exceeded Rs. 40,00,000/-, assessee was required to get its accounts audited in terms of S.44AC of the Act. As it had not been done, penalty was levied under S.271B of the Act. Matter was carried in appeal before the Commissioner of Income Tax (Appeals), Calicut (in short, CIT(A)), who cancelled the levy on ground that return having been filed under the amnesty scheme, there was no scope for levy of penalty. Conclusions were challenged by the Revenue before Tribunal, which concurred with the views of CIT(A). Thereafter, application under S.256(1) of the Act was filed to make a reference and as stated above, questions as set out have been referred.

(3.) Only question that falls for determination is whether in respect of a return filed under the "amnesty scheme" and on assessment on the basis of the same, there is scope for initiation of penalty proceedings and / or levy of penalty. Tribunal found that assessing officer himself had observed that proceedings under S.271(1)(a) and 273(2)(c) were not initiable. But, revenue's stand is that none of the circulars issued in relation to the scheme specifically dealt with a case of penalty under S.271B. Therefore, Tribunal was not justified in cancelling the penalty.