Law: Income Tax Act, 1961

Section: 256,271(1)(c)

Indian Income Tax Act, 1961 ---Sections 256, 271(1)(c)---Penalty---Reference to High Court---Finding of fact recorded by Tribunal---Whether High Court competent to go behind it and to reappraise the case--Held no---Expression "On the facts and circumstances found by the Appellate Tribunal", meaning of. Case followed:- Karnani Properties Ltd. v. Commissioner of Income Tax (1971) 82 I.T.R. 547 (S.C.). JUDGMENT The judgment of the court was delivered by R.M. SAHAI J.).-The following question of law has been referred for our opinion: "Whether, upon the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that no penalty could be levied under Section 27(1)(c) of the Income Tax Act, 1961, upon the assessee?" The facts were that for the assessment year 1965-65 the assessee-firm filed a return showing an income of Rs. 42,887. The Income Tax Officer completed the assessment on a total income of Rs. 82,798. The penalty proceedings were initiated under Section 271(1)(c) of the Income Tax Act (hereinafter described as "the Act") in respect of unexplained cash credit and unexplained investment of Rs, 26,274, The case was referred by the Income Tax Officer to the Inspecting Assistant Commissioner who issued a show-cause notice under Section 274 of the Act. In response to the notice the assessee filed a written reply which was not accepted by the Assistant Commissioner and he found that the assessee interpolated the entries in the cash book with regard to the credit of Rs. 8,000. He further recorded a finding that the assessee tried to evade taxes by claiming the business style Habib Oil Industrial Corporation as a separate unit and that the explanation given regarding the cash credit was not even probable. The assessee filed an appeal and the Income Tax Appellate Tribunal (hereinafter called the "Appellate Tribunal") set aside both these findings and recorded the following findings. It found: "No doubt, though her statement was not satisfactory for the purposes of assessment proceedings, yet it cannot be said that the statement was so improbable as to be branded as false. Similarly, the attempt of the assessee to make Habib Oil…

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