Law:

Section:

Section 271(1)(c) , read with section 256 of the Income-tax Act, 1961 - Penalty - For concealment of Income - Assessment year 1960-61 - Whether where Tribunal having considered totality of material before it came to conclusion that no concealment of income was proved by department to warrant levy of penalty, it was justified in deleting penalty and, no referable question of law arose from Tribunal's order - Held, yes FACTS For the assessment year 1960-61, the ITO rejected books of account of the assessee. He, therefore, estimated the income from manufacture and sale of bidis. Further, he found that there were no drawings by the partners for their personal expenses but the assessee had claimed Rs. 5000 in shop expenses on account of their messing expenses and other expenses of the partners. The ITO held that it was difficult to believe that the expenses of partners would be only Rs. 5000 considering their high standard of living. He concluded that personal expenses of the partners was debited in the business expenses of the firm under different heads. He, therefore, after taking into consideration the disallowance under different heads in earlier years disallowed Rs. 56,000 out of expenses claimed by the assessee. He also disallowed Rs. 10,118, claimed as interest paid on hundies as, in his opinion the hundies were bogus. The ITO also initiated penalty proceedings under section 271(1)(c) for inaccurate particulars. On appeal, the Tribunal set aside the imposition of the penalty holding, inter alia, that the department had only "assumed by way of inference that the particulars as furnished by the assessee were inaccurate" but had not "by positive evidence proved that the particulars of income as furnished by the assessee were in fact inaccurate" The Tribunal also rejected the revenue's application under sec. 256(1). On application under section 256(2): HELD In the instant case, the Tribunal considered the totality of material before it and came to the conclusion that no concealment was proved by the department, to warrant the levy of a penalty on the assessee. This finding was a finding of fact and the Tribunal was quite justified in rejecting the application of…

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