COMMISSIONER OF INCOME TAX Vs. RAJDEV KIRANA STORES

JUDGEMENT

(1.) BY this reference under Section 256(1) of the Income-tax Act 1961 (hereinafter referred to as "the Act"), the Income-tax Appellate Tribunal, Indore Bench, has referred the following question of law to this court for its opinion ;

(2.) THE material facts giving rise to this reference, briefly, are as follows : For the assessment year 1979-80 for which the accounting year ended on Diwali 1978, the assessee claimed deduction of expenditure amounting to Rs. 6,700 on account of penalty levied on the assessee under the M. P. General Sales Tax Act. THE Income-tax Officer disallowed that claim. THE appeal preferred by the assessee in this behalf was dismissed by the Commissioner of Income-tax (Appeals). On further appeal before the Tribunal, the Tribunal held that the amount paid by the assessee on account of penalty levied under the provisions of the Madhya Pradesh General Sales Tax Act was allowable as the imposition of penalty did not involve any moral culpability or mens rea. Aggrieved by this order passed by the Tribunal, the Revenue sought reference and it is at the instance of the Revenue that the aforesaid question of law has been referred to this court for its opinion.