Law:

Section:

Section 256(2), read with section 271(1)(c), of the Income-tax Act, 1961 - Reference - Direction to tribunal to state question of law - Assessee maintained separate accounts for cement tiles, glazed tiles and fire bricks showing separate sales - ITO enhanced sales of said items - IAC imposed penalty under section 271(1)(c) - Tribunal deleted the same holding that ITO had not pointed out any suppressed sale - Whether tribunal right in holding that no questions of law arose - Held, on facts, yes Facts The assessee-company carried on the business of sanitary fitting and manufacture of tiles. It had maintained separate trading accounts of cement tiles, glazed tiles and fire bricks. For the assessment year 1972-73, it showed their respective sales at Rs. 4,25,729, Rs. 3,40,809 and Rs. 58,300, which were enhanced by the ITO by Rs. 50,000, Rs. 5,000 and Rs. 15,000, respectively, as trading accounts were not fully verifiable. He also added Rs. 12,800 in cement account. The IAC imposed a penalty of Rs. 20,655 for these concealments under section 271(1)(c). The Tribunal, on appeal, deleted the impugned penalty, holding, inter alia, ( i) that there was no deliberate concealment on the part of the assessee which had succeeded in establishing that the impugned addition had been made due to the difference of opinion; and (ii) that since there was no closing stock at all relating to cement for sale to the public and the assessee itself had shown a closing stock of 326 bags relating to manufacture of cement tiles, it could not be said that any stock of cement meant for manufacturing cement tiles was detected by the ITO. The Tribunal also rejected the revenue's application under section 256(1). On an application under section 256(2), the revenue took exception to the Tribunal's approach by arguing that the Tribunal had given a decision on an express provision of law that wherever an assessment was based on estimate, no penalty could be imposed even if the case fell under section 271(1)(c ) read with its Explanation. Held The Tribunal had given firm findings that the ITO could not point out any suppressed sale made by the assessee and that 326 bags of cement were shown in its…

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