Law: Income Tax Act, 1961

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

Income-tax----Reference---Penalty---Concealment of income---Finding by Tribunal that there had been mistakes and that when mistakes were discovered the assessee had agreed to additions to its income---Finding of fact---Tribunal was correct in holding that there had been no concealment of income and cancelling penalties---No questions of law arose---Indian Income Tax Act, 1961, Ss.256 & 271. Held, (i) that, for the assessment year 1987-88, there was a mistake in accounting. The accountant who was in charge of the accounts died on February 17, 1986 and therefore, the assessee was not in a position to explain how the mistake actually occurred. However, when the mistake was discovered the assessee had corrected it by filing a revised return. Considering all these aspects, the Tribunal was of the view that the penalty under section 271(1)(c) was not leviable for the assessment year 1987-88. This was a finding of fact and no question of law arose from it. (ii) That in so far as the assessment year 1988-89 was concerned, the Tribunal pointed out that there was no evidence to connect the mistake with the partner of the firm and that there was no attempt on the part of the partner to conceal the income inasmuch, as the actual register of stock inventory was produced for verification in which there was a mistake in totalling. The partner claimed that the mistake was due to the person who maintained the register and agreed to the addition of the difference. The Tribunal held that there had been no concealment of income. This was a finding of fact. The Tribunal was justified in cancelling the penalty and no question of law arose from its order. THIS JUDGMENT DELIVERED BY K.A. THANIKKACHALAM, J.---In these three tax case petitions, ~`!he Department requests this Court to direct the Tribunal to refer the following two questions for the assessment years 1986-87 and 1988-89 for the opinion of this Court under section 256(2) of the Income Tax Act, 1961: Assessment year 1986-87: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in cancelling the penalty of Rs.4,40,185 levied under section 271(1)(c) of the Income-tax Act?"…

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