Law: Income Tax Act, 1961

Section: 271(1)(c)

JUDGMENT K.A. Puj, J. - This Income-tax reference is arising out of the order of Income-tax Appellate Tribunal dated 20-9-1990 in R.A.No.413/Ahd./1989 and R.A.No.443/Ahd./1989, both for assessment year 1980-81. R.A. No. 413/Ahd./1989 is filed by the assessee and at the instance of the assessee, the Tribunal has referred to the following question of law for the opinion of this Court:- (a)Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the levy of penalty under section 271(1)(c) of the Income-tax Act, 1961 to the extent of the claim relatable to an amount of Rs. 1,83,492 ? 2. R.A. No.443/Ahd./1989 is filed by the revenue and at the instance of the revenue, following question of law is referred to for the opinion of this Court. (a)Whether, the Appellate Tribunal is right in law and on facts in cancelling the penalty referable to income of Rs. 1,00,112? The brief facts giving rise to the present reference are as under:- 3. The assessee is a private limited company carrying on the business of manufacturing and selling chemicals, Sodium Benzoate and Benzoate and Benzoic Acid at Baroda. The assessment year involved is 1980-81 for which the accounting period ended on 30-6-1979. Before few days from the close of its accounting period on 30-6-1979 a fire broke out in assessee's factory resulting in destruction of and/or substantial damage to its building, plant and machinery and finished or semi-finished goods, all insured. The assessee claimed (i) a sum of Rs. 1,83,492 from the Insurance Company on account of loss and damage to its plant and machinery on replacement cost basis and (ii) a sum of Rs. 1,00,112 on account of loss to its finished or semi-finished goods. The Insurance Company, however, paid, in the month of November/December, 1979, a sum of Rs. 84,462 in respect of the former claim and a sum of Rs. 56,173 in respect of the latter. 4. The assessee filed its return of income for the year under consideration on 30-6-1980 declaring a loss of Rs. 75,605. In its said return the assessee had claimed loss of Rs. 1,83,492 in respect of destruction of and/or damage to its plant and machineries. The Income-tax…

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