Law:

Section:

Section 256(2), read with section 271(1)(c), of the income-tax act, 1961-Reference-Question of fact-Assessee renovated his house and furnished estimates of expenditure-ITO estimated higher expenditure and imposed penalty-Tribunal held that assesses had no contumacy or deliberate attempt to furnish wrong information-Whether any question of law arose from tribunal's order of deletion of penalty imposed-Held, on facts, no Facts For the assessment years 1967-68 to 1971-72, apart from professional income, the assessee owned a house and, at the instance of the ITO, furnished an estimated expenditure for constructing the house. The ITO, however, estimated it at a higher figure, the difference being taken as unexplained investment. The ITO further initiated penalty proceedings under section 271(1)(c). On the date fixed for hearing, the assessee wanted time to produce evidence, but the ITO imposed penalties for the five assessment years under consideration. The AAC dismissed the assessee's appeal. The Tribunal held that the assessee had not been given reasonable opportunity to adduce evidence in support of his case and remanded the case back to the AAC for disposal. The AAC, however, maintained the penalties imposed upon the assessee. On further appeal, the assessee produced the evidence to show that the ITO had asked the assessee to sign the order sheets by back-dating it and further contended that the impugned construction was not a new construction but a reconditioning of the old house. The Tribunal, thus, held that there was no contumacy or deliberate attempt on the part of the assessee to furnish wrong information and that the AAC had overlooked the evidence available in the case, and, therefore, it was not a fit case for imposition of penalty. On reference under section 256(2): Held The Tribunal in exercise of its appellate powers came to the conclusion that the material indicated want of total absence of any contumacy or deliberate attempt on the part of the assessee to mislead the ITO. Facts had been disclosed appropriately, but the ITO had adopted an estimate according to the best of his which led to the variation between the returned and the assessed figure of…

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