Law:

Section:

Section 271(1)(c), read with section 256 of the Income-tax Act 1961 - Penalty - For concealment of income - Whether where Tribunal on consideration of entire facts and circumstances of case came to conclusion that assessee did not conceal any income and, therefore, it was not liable to penalty under section 271(1)(c), no referable question of law arose from said order of Tribunal - Held, yes FACTS On 7-1-1967, the assessee had sold all its assets and properties. Thereafter, the business of the assessee was totally suspended. On 31-12-1970, the assessee submitted its return of income for the relevant assessment year disclosing the income as 'Nil'. But, in the return itself, the fact of sale of the colliery was duly disclosed by the assessee. The assessee had also filed a copy of the sale deed. On the basis of this disclosure, the ITO computed certain income of the assessee under section 41(2) and, for the purpose of computation, the ITO adopted a certain basis according to his own mode of computation. Consequently, the assessee was subjected to a penalty under section 271(1)(c). On appeal, the Tribunal set aside the order of penalty holding that the assessee did not conceal any income. On application under section 256(2) : HELD The departmental representative could not show or even urge that the finding of fact arrived at by the Tribunal was in any way perverse or could be said to have been vitiated for non-consideration of relevant materials or had been arrived at by taking into account any irrelevant materials. In this view of the matter, the finding of the Tribunal appeared to be a finding of fact and no question of law arose out of the impugned order of the Tribunal for a reference under the provisions of section 256. The reference itself was incompetent and, accordingly, rejected. Note : The case was decided in favour of the assessee. CASE REFERRED TO CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14 (SC). K.K. Vidyarthi and S.K. Sharan for the Applicant. JUDGMENT G.C. Bharuka, J.-This tax case arises out of an order passed by this court under section 256(2) of the Income-tax Act, 1961 (hereinafterto be referred to as "the Act" only), directing the Tribunal…

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