Law: Income Tax Act, 1961

Section: 256(1),271(1)(c)

Income-tax-----Reference---Penalty---Concealment of income---Penalty cancelled by CIT (Appeals)---Tribunal setting aside order of CIT (Appeals) to consider afresh on merits---Court will not answer reference as matter is before CIT (Appeals) on merits---Indian Income Tax Act, 1961, Ss. 256(1) & 271(1)(c). The assessee filed a loss return for the assessment years 1968-69 and 1969-70. The Income-tax Officer assessed the loss at a lower amount and initiated penalty proceedings under section 271(l)(c) of the Income Tax Act, 1961 read with the Explanation thereto. It was cancelled by the Commissioner of Income-tax (Appeals) only on the point that the Explanation referred to by the Income-tax Officer was not in existence when notice was issued, for levying the penalty. The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) to consider the matter on the merits. On a reference: Held, that the questions referred would not be answered by the High Court as the matter was before the Commissioner of Income-tax (Appeals) on the merits. CIT v. Prithipal Singh & Co. (1990) 183 ITR 69 (P & H) ref. JUDGMENT ASHOK BHAN, J.---The following two questions have been referred by the Income-tax Appellate Tribunal, Amritsar, relating to assessment years 1968-69 and 1969-70, for the opinion of this Court: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Explanation to section 271(1)(c) which was deleted by the Taxation Laws I(Amendment) Act, 1975, with effect from April 1, 1976, was applicable to this case? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the penalty orders should not have been cancelled by the Commissioner of Income-tax (Appeals) without considering whether the penalty was imposable under the main provisions of section 271(1)(c)?" The assessee had filed its return on October 29, 1971, for the assessment year 1968-69 showing a loss of Rs.2,32,870. The Income-tax Officer framed the assessment on September 17, 1977 determining the total loss at Rs.1,30,063. After recording his satisfaction regarding initiation of proceedings…

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