(1.) ALL the tax cases under reference relate to the challenge to the levy of penalties on three assessees who are respondents herein. Tax Cases Nos. 913 and 914 of 1986 and Tax Cases Nos. 1458 and 1459 of 1986 arise under the Income-tax Act, 1961 (hereinafter to be referred to as "the Act"). Tax Case No. 921 of 1986 arises under the Wealth-tax Act, 1957 (hereinafter to be referred to as "the Wealth-tax Act"). In so far as Tax Cases Nos. 913 and 914 of 1986 are concerned, the assessee, one M. P. Narayanan, is an individual and the assessment years involved are 1965-66 and 1966-67. In so far as Tax Cases Nos. 1458 and 1459 of 1986 are concerned, the assessee, M. P. Narayanan, is a registered firm and the assessment years involved are 1970-71 and 1971-72. In Tax Case, No. 921 of 1986, the assessee is one Sethukumari and the assessment year involved is 1974-75.
(2.) IN Tax Cases Nos. 913 and 914 of 1986, the following" three questions of law have been referred at the instance of the Revenue by the Appellate Tribunal for our consideration : ,
(3.) THE assessee-firm filed appeals before the Commissioner of Income-tax (Appeals) challenging the orders levying penalty. THE Commissioner of Income-tax (Appeals) cancelled the penalties on the question of jurisdiction and also on the merits of the case as well, THE Tribunal, on further appeal by the Department, did not agree with the view of the Commissioner of Income-tax (Appeals) on the question of jurisdiction. However, on the question of merits, the Tribunal held that the assessee-firm had come forward with a settlement on the terms that penalty may not be imposed and there was no admission by the assessee-firm that there was concealment of income in the returns filed by the assessee-firm. THE Tribunal held that there was no evidence that the income added to the asses-see-firm's income by rejecting the explanation of the assessee was really the income of the assessee and it could not be charged for the concealment of such income. THE Tribunal upheld the order of the Commissioner of Income-tax (Appeals) holding that there was no justification for imposing penalty on the merits of the case, and, accordingly, the Tribunal dismissed the appeal preferred by the Revenue.