1995 (12) TMI 58 - HC - Income Tax

Summary

Issues:
1. Tenability of the appeal before the Tribunal.
2. Deemed concealment of income and penalty imposition.

Analysis:

Issue 1: Tenability of the appeal before the Tribunal
The applicant, a partnership firm, challenged the maintainability of the appeal filed by the Commissioner of Income-tax before the Tribunal. The Tribunal allowed the appeal and imposed a penalty, disregarding the objection raised by the applicant regarding the validity and maintainability of the appeal. The applicant contended that the Tribunal erred in accepting a revised memo of appeal filed beyond the limitation period. The High Court held that the question of tenability of the appeal was crucial and needed to be addressed. The Court found that the Tribunal failed in its legal obligation by not specifically considering whether the revised memo of appeal could rectify the defect and render the appeal legally tenable. Consequently, the Court directed the Tribunal to refer this question for consideration.

Issue 2: Deemed concealment of income and penalty imposition
Regarding the concealment of income amounting to Rs. 77,507, the Tribunal concluded it was a case of deemed concealment as the assessee failed to provide an explanation. The High Court noted that the Tribunal's decision was based on the Explanation to section 271(1)(c) of the Income-tax Act, which deems the concealed amount as income when no explanation is provided. The Court determined that a specific question needed to be formulated and referred to address the issue of deemed concealment of income. The Court disagreed with the argument that the questions raised were purely factual and not legal in nature. Citing the case of Mohinder Singh Gill v. Chief Election Commissioner, the Court emphasized the need for evidentiary backing in reaching conclusions. Consequently, the High Court directed the Tribunal to refer the question of deemed concealment of income for further examination.

In conclusion, the High Court allowed the reference application in part, requiring the Tribunal to state the case and refer the identified questions of law for consideration. The Court instructed the Tribunal to comply with the order within six months and forwarded a copy of the order for immediate action.