COMMISSIONER OF INCOME TAX Vs. TANGAL P C

JUDGEMENT

(1.) IT appears from a perusal of the appellate order of the Tribunal that penalty had been imposed upon the assessee in the sum of Rs. 35,000 by the customs authorities on the ground that he had under invoiced certain imports and thereby imported more goods than were authorised by the import licence. The assessee went in appeal and the penalty amount was reduced to Rs. 15,000. The assessee claimed before the ITO an allowance in the said sum of Rs. 35,000 on the ground that it was an expenditure incurred wholly, exclusively and necessarily for the purpose of his business. The ITO rejected the claim. In appeal, the AAC allowed an allowance of the reduced penalty amount of Rs. 15,000. The Tribunal, in second appeal, upheld the AAC order. It found that the assessee had, upon payment of the penalty amount, cleared the goods and sold them. Thereby he had made profits, which had been offered for taxation. To earn that profit, he had had to pay the penalty of Rs. 15,000. From out of the order of the Tribunal, the following question is referred to us : "Whether, on the facts and in the circumstances of the case and in law, the fine of Rs. 15,000 paid by the assessee as penalty for infringement of import regulations was allowable as an admissible expenditure under S. 37(1) of the IT Act, 1961 "

(2.) THE facts before us are inadequate to give a satisfactory answer to the question. As the orders imposing the penalty of Rs. 35,000 and in appeal reduction of same to Rs 15,000 are not annexed, we cannot determine whether the penalty was imposed because the assessee had himself committed an infraction of the law. Without being aware of all the facts, we cannot apply the law.

(3.) NO order as to costs.