Law: Income Tax Act, 1961

Section: 256,271(1)(c)

Income-tax----References---Penalty---Concealment of income---Claim to deduction of Commissioner paid to sole selling agent disallowed---Penalty imposed for concealment of income but cancelled by Tribunal---Reference of question whether cancellation of penalty justified---Appeal relating to quantum of Commission pending before Appellate Authority---Question need not be answered---Indian Income Tax Act, 1961, Ss.256 & 271(1)(c). For the assessment years 1969-70 and 1970-71, the assessee¬ company claimed deductions of sums paid by it as commission to its sole selling agent. The Income-tax Officer did not allow the deduction. He also initiated penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961, and referred the case to the Inspecting Assistant Commissioner. The latter imposed penalty equal to the amount of commission claimed as deduction by the assessee. The appeals filed by the assessee were allowed by the Income-tax Appellate Tribunal, following its order for earlier years. The Tribunal having refused to make a reference, the High Court, on an application under section 256(2) called for a reference of the question whether the penalty had been rightly cancelled. Meanwhile, however, the main case relating to the quantum of commission paid to the sole selling agent was still pending consideration by the Appellate Authority on a remand by the Tribunal: Held, that in view of the admitted fact that the issue relating to the quantum of commission payable to the sole selling agent of the assessee, was still undecided, determination of the question of law called for by this Court would be a futile exercise. The question referred to the Court did not deserve to be answered, because in fact no such question arose. JUDGMENT G. S. SINGHVI, J.---Pursuant to the direction given by the High Court on November 18, 1977 (see (1978) 114 ITR 410) in Income-tax Appeal No. 113 and Income-tax case, No. 114 of 1977, the Income-tax Appellate Tribunal, Amritsar, referred the following question for the opinion of the High Court: "Whether, on the facts and in the circumstances prevailing for the assessment years 1969-70 and 1970-71, the Tribunal was justified in…

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