Law: Income Tax Act, 1961

Section: 256,271(1)(c)

Income-tax-----Reference---Penalty---Concealment of income---Finding that assessee had failed to discharge burden of proving that there had seen no concealment of a particular income---Finding of fact---Finding that no penalty could be imposed in respect of income which had been disclosed---Finding of fact--¬No question of law arises---Indian Income Tax Act, 1961, Ss. 256 & 271(1)(c). The assessee was an individual. He had derived income as a partner in five firms. He claimed deduction to the extent of 40 per cent. on account of appointment of one, P, for supervision work with regard to his share of profits from one of the firms. The sub-partnership as alleged by the assessee was not proved to be genuine. There was nothing by way of any documentary evidence to show that any nature of work was done by P on behalf of the assessee. P was examined and he had admitted that there was no evidence in this regard. As such, it was found that there was some concealment of income and penalty was imposed. The assessee also claimed deduction regarding payment of interest. The provisions of section 271(1)(c) of the Income Tax Act, 1961, were considered by the Tribunal and it was found that no penalty was leviable with regard to the interest claimed as deduction. It was also found that the claim of the assessee was not described as a false one. On an application to direct reference of questions at the instance of the assessee and the Department: Held, dismissing the application, (i) that the finding with regard to the sub-partnership that the assessee failed to discharge the burden on him under the provisions of section 271(1)(c) of the Act was a question purely based on facts and no legal question arose from it; CIT v. Sethi Textiles (1992) 198 ITR 222 (MP) fol. (ii) that the finding regarding the interest payment that there was no concealment of income on the part of the assessee was justified. In this particular case only pure questions of facts were involved and, therefore, under section 256(2) no order could be passed for making the reference to the High Court. CIT v. Mussadilal Ram Bharose (1987) 165 ITR 14 (SC); CIT v. K.R. Sadayappan (1990) 185 ITR 49 (SC) and Brij…

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