COMMISSIONER OF INCOME-TAX Vs. BAWA LEATHER INDUSTRIES

JUDGEMENT

(1.) THE Commissioner of Income-tax, Jalandhar, made an application under Section 256 (1) of the Income-tax Act, 1961, to the Income-tax Appellate Tribunal, Amritsar, to draw up a statement of the case and to refer the following question to this court' : "whether, on the facts and in the circumstances of the case the learned Income-tax Appellate Tribunal is right in law in holding that no penalty under Section 271 (1) (c) of the Income-tax Act, 1961, is leviable in this case ?"

(2.) THE Tribunal having dismissed the application, the Commissioner has approached this court through the present petition under Section 256 (2) of the Act. He complains that the Tribunal has erred in rejecting the application. Is it so ? A few facts may be noticed.

(3.) DURING the course of the assessment proceedings, the Income-tax Officer obtained a copy of the account of the assessee in the books of Liberty Footwear, Karnal. On a perusal of this account, it was discovered that the cheques and credit notes related to the cash assistance and were as such income of the assessee. The debit notes had been issued on account of a claim for shortage. Consequently, the Income-tax Officer, vide his letter dated September 28, 1983, required the assessee to explain as to why the credit notes had not been accounted for. The assessee explained that in the absence of requisite information, it was impossible to find out whether the credit notes were in respect of the cost of material or towards cash assistance. It was further pointed out that the benefit had not even been claimed in respect of the debit notes for want of necessary information. The assessee also produced documentary evidence to show that the cheques were sent by Liberty Footwear without specifying the nature of payment. However, in view of the fact that the information had been supplied by the party to the Income-tax Officer, the assessee agreed that the amount, of the three credit notes/cheques, viz. , Rs. 1,33,784. 30, be added to the income and the amount of debit notes, viz. , Rs. 38,082. 60 be added to the expenses. Resultantly, the amount Rs. 95,701. 70 or Rs. 95,702 was added to the income. The assessing authority made the addition and levied tax. It also initiated penalty proceedings under Section 271 (1) (c ). A penalty of Rs. 76,065 was imposed. The assessee's appeal having been dismissed, it filed a second appeal before the Tribunal. On a detailed examination of the entire record, the Tribunal recorded the following conclusions :