COMMISSIONER OF INCOME TAX Vs. CHUNNILAL SITARAM

JUDGEMENT

(1.) THE order in this case shall also govern the disposal of Misc. Civil Case No. 713 of 1985 [CIT, Jabalpur vs. M/s. Chunnilal Sitaram, Narsinghpura] as both arise out of similar orders of the Tribunal refusing to refer certain questions which, according to the applicant-Department, are questions of law arising out of the order of the Tribunal. The two cases relate to two different assessment years but the facts and circumstances in both the cases are identical.

(2.) THE respondent-assessee is engaged in manufacture and sale of bidis. The assessee submitted returns which were later on revised. The ITO found that the closing stocks of previous years were undervalued and thus concealed the particulars of income. On this finding, penalty proceedings were initiated under S. 271(1)(c) of the IT Act. The notice was issued to the assessee. The explanation was that the stock left at the end of the previous year contained rotten leaves and as such was valued at a lower rate. The explanation did not satisfy the authority and, therefore, penalty was imposed in both the cases. Appeals before the CIT(A) failed and the penalties imposed were confirmed. Further appeals before the Tribunal were allowed and the penalties were deleted. It observed that the Department failed to prove any concealment and the case rested merely on undervaluation and addition. It further observed that income has been arrived at estimate of rate only and not by particular amount of concealment. The Department then applied before the Tribunal under S. 256(1) of the IT Act for a reference of the following question for opinion of this Court :

(3.) AS regards the additional question sought to be referred in MCC No. 62 of 1984, suffice it to say that the Tribunal has observed that no objection was ever raised when such evidence was sought to be adduced by the assessee. In fact, Shri Rawat, learned counsel for the applicant, did not seriously press for reference of this question.