COMMISSIONER OF INCOME TAX Vs. PADMA RAM BHARALI

JUDGEMENT

(1.) THIS is an application under Section 256(2) of the I. T. Act, 1961 (hereinafter referred to as "the Act"), to call upon the Income Tax Appellate Tribunal, Gauhati Bench, Gauhati (hereinafter referred to as "the Tribunal"), to submit the statement of the case on the following question, supposedly question of law, for decision at this end :

(2.) THE relevant facts necessary for a disposal of the application may be compacted as under : The assessee, an HUF, submitted its return of income on December 13, 1968, showing total income of Rs. 66,369. On February 2, 1970, a revised return was submitted showing an income of Rs. 1,61,607. In the revised return, the assessee included the three items, namely, Rs. 40,588, Rs. 28,742 and Rs. 24,591. Due explanations were submitted by the assessee for the omissions or wrong statements. Regarding the last item, which is the subject -matter of the present application, the assessee claimed that in the purchase account (Hindusthan Lever Goods) invoices amounting to a sum of Rs. 24,591 was debited twice. According to the assessee all these mistakes including the mistake in respect of Rs. 24,591, were detected when the accounts were audited by the auditors in 1969 -70 and on discovery of the mistakes, the assessee immediately furnished the revised return before the assessment. The Income Tax Officer (hereinafter referred to as "the I.T.O."), on a consideration of the facts and circumstances of the case, initiated proceedings under Section 271(1)(c) of the Act, as, according to him, concealment had been made at the time when the original return had been submitted. However, as the minimum penalty imposable exceeded the pecuniary jurisdiction of the ITO, he referred the matter to the IAC. The IAC applied the provisions contained in the Explanation to Section 271(1)(c) of the Act and imposed a penalty of Rs. 94,792, on the assessee. The assessee preferred an appeal before the Income Tax Appellate Tribunal which was numbered as ITA No. 83 (Gau)/73 -74. The Tribunal upheld the order of penalty imposed on the assessee in respect of Rs. 28,742, but accepted the explanation of the assessee in respect of the sums of Rs, 40,588 and Rs. 24,591 that the assessee had detected the mistakes and filed a revised return and, accordingly, it could not be said that the assessee had any intention of concealment. It held that the two items could be included by the assessee in the revised return under Section 139(5) of the Act and as such Section 271(1)(c) had no application. The assessee asked for and obtained a reference from the Tribunal to the High Court under Section 256(1) of the Act in respect of the penalty imposed in respect of the amount of Rs. 28,742 and this court in Padma Ram Bharali v. , answered the question referred in the negative and against the Department. It held that the Tribunal was not justified in law in upholding the penalty imposed by the IAC relating to the amount of Rs. 28,742.

(3.) WHILE considering the question as to the justifiability of upholding the penalty of Rs. 28,742, this court dwelt upon the other two items, namely, Rs. 40,588 and Rs. 24,590.57 (say Rs. 24,591), and had held that the Tribunal was justified in holding that the assessee had included the items in its revised returns under Section 139(5) of the Act. The inclusion of the two amounts in the revised return under Section 139(5) of the Act was legal, valid and well justified and the provisions of Section 271(1)(c) were not attracted at all and no question of imposing penalty could arise. The Revenue was aggrieved by the order of the Tribunal holding that no penalty could be levied in respect of Rs. 24,591 and filed an application for reference under Section 256(1) of the I.T. Act before the Tribunal. The Tribunal, while considering the application of the Revenue, inter alia, observed as under: