Income‑tax‑‑‑

‑‑‑‑Reference‑‑‑Penalty‑‑‑Concealment of income‑‑‑Tribunal finding that surrender of cash credits for assessment was only because of inability to produce creditors and that there was no concealment of income‑‑‑Tribunal justified in deleting penalty‑--‑No question of law arose‑‑‑Indian Income Tax Act, 1961, Ss.256 & 271(1)(c).

Held, dismissing the application for reference, that the Tribunal had found that the assessee had furnished confirmations from the cash creditors and it was only when the Assessing Officer wanted him to produce these creditors, including Y in whose case summons sent under section 131 of the Income Tax Act, 1961, were received back unserved, that the assessee found it expedient to surrender the amounts, but merely because the assessee had surrendered the amounts it did not follow that the amount agreed to be added represented its concealed income. The surrender so made also stood accepted and the Revenue had brought no material on record, besides the factum of surrender to show that the amounts involved represented undisclosed income of the assessee. The Tribunal was justified in cancelling the penalty No question of law arose from the order.

CIT v. K.P. Sampath Reddy (1992) 197 ITR 232 (Kar.) ref.

R.D. Jolly with Ms. Prem Lata Barisal for the Department.

N.S. Bhatnagar for the Assessee.

JUDGMENT

The Commissioner of Income‑tax has filed ‑ this petition ‑ under section 256(2) of the Income Tax Act, 1961 (for short "the Act"), seeking a direction to the Income‑tax Appellate Tribunal to state the case and refer the following questions for the opinion of this Court:

"(1)Whether, on the facts and circumstances of the case, the Income‑tax Appellate Tribunal was correct in law in dismissing Department's appeal against the Commissioner of Income‑tax (Appeals) order cancelling penalty of Rs.64,136 levied under section 271(1)(c) of the Income Tax Act, 1961?

(2)Whether the Income‑tax Appellate Tribunal is correct in facts and law in holding that the Revenue is not absolved from proving mens rea of quasi‑criminal offence when the provisions of law as in force for the assessment year 1987‑88 do not require the proving of any mens rea?"

During the course of assessment proceedings for the assessment year 1987‑88, the Assessing Officer noticed certain cash credits in the books of account of the assessee's a registered firm. He asked the assessee to prove these cash credits. Though confirmation letters from the creditors concerned were filed by the assessee they were not produced. Summons under section 131 of the Act were also issued to one of the creditors but the same were received back unserved. The assessee surrendered all the cash credits. Accordingly, the amount so surrendered was added to the income of the assessee.

On account of the said addition, penalty proceedings under section 271(1)(c)" of the Act were initiated against the assessee. The explanation furnished by the assessee to the effect that the cash credits were surrendered on an understanding with the Department that no penalty under the said section will be levied was rejected by the Assessing Officer. He, accordingly, levied a minimum penalty of Rs.64,136 under the said section. On an appeal by the assessee, the learned Commissioner of Income‑tax (Appeals) deleted the said penalty. The Revenue took the matter in further appeal to the Income‑tax Appellate Tribunal. The Tribunal upheld the order of the Commissioner of Income‑tax (Appeals). While doing so the Tribunal held as follows:

"There is no denying the fact that the assessee had furnished confirmations from the cash creditors and it is only when the Assessing Officer wanted him to produce these creditors, including Yog Raj Modi; in whose case summons under section 131 sent were received back unserved, that the assessee found it expedient to surrender the amounts but merely because the assessee has surrendered the amounts it did not follow that the amount agreed to be added represented its concealed income. The surrender so made also stand accepted and the Revenue has brought no material on record, besides the factum of surrender to show that the amounts involved represented undisclosed income of the assessee.

The Revenue's application under section 256(1) of the Act having been dismissed by the Tribunal, the present petition has been filed.

We have heard learned counsel for the parties. We are of the view that no question of law, fit for reference to this Court, arises from the order of the tribunal.

From the afore‑extracted order of the Tribunal it is evident that the Tribunal has found as a fact that the surrender of the cash credits by the assessee, during the course of assessment proceedings, was bona fide and merely because the said amount has been included in the total income of the assessee, it does not follow as a necessary corollary that the assessee has admitted the same to be its concealed income, to bring it within the ambit of section‑ 271(1)(c) read with the Explanation thereto. The aforenoted findings recorded by the Tribunal are pure findings of fact and cannot be said to be perverse or unreasonable. In any case the same are not sought to be challenged by the Revenue as perverse in the proposed

The ratio of the decision of the Karnataka High Court in CIT v. K.P. Sampath Reddy (1992) 197 ITR 232, relied upon by Mr. R.D. Jolly, learned senior standing counsel for the Revenue, is not applicable on the facts of the present case. The facts of that case are clearly distinguishable. From a bare reading of even the question referred in that case, it is obvious that the Tribunal had found as a fact that the assessee in that case had not only admitted the concealment of income by means of a letter, its books of account also showed that it had concealed the income, which, according to the Tribunal is not the case here.

For the foregoing reasons, we do not find any infirmity in the order passed by the Tribunal declining to refer the proposed questions.The petition is accordingly dismissed but with no order as to

MBA./391/FcPetition dismissed: