1977 (8) TMI 1 - SC - Income Tax

Whether finding of the Tribunal that the assessee was not guilty of any fraud in returning the income, which resulted in the income being returned at a figure lower than 80 per cent. of the income assessed, is contrary to the weight of the record and was arrived at without considering the entire evidence on the record - Whether in view of section 271(1)(c) Tribunal was right in law in cancelling the penalty - we direct that the High Court shall call for a statement of case from the Tribunal

Summary

Issues:
1. Assessment of income for the years 1967-68 and 1968-69
2. Initiation of penal proceedings under section 271(1)(c) of the Income-tax Act, 1961
3. Orders of penalty levied by the Inspecting Assistant Commissioner
4. Appeals to the Income-tax Appellate Tribunal and setting aside of penalty orders
5. Rejection of applications for reference by the High Court
6. Appeal to the Supreme Court for setting aside the orders of the High Court and Tribunal

Analysis:
The Supreme Court judgment pertains to a registered firm operating a restaurant in Ahmedabad, which filed returns for the assessment years 1967-68 and 1968-69, disclosing lower incomes than assessed. The Income-tax Officer initiated penal proceedings under section 271(1)(c) due to the significant variance in the disclosed and assessed incomes. The Inspecting Assistant Commissioner imposed penalties of Rs. 20,000 and Rs. 2,12,000 for the respective years. Subsequently, the firm appealed to the Income-tax Appellate Tribunal, which overturned the penalty orders. The Additional Commissioner of Income-tax then sought to refer questions to the High Court, but both the Tribunal and the High Court rejected the applications, leading to the appellant filing appeals before the Supreme Court.

The Supreme Court, after hearing arguments from both sides, found it necessary to set aside the decisions of the High Court and the Tribunal. The Court directed the High Court to call for a statement of case from the Tribunal on specific questions related to the Tribunal's findings regarding the firm's alleged fraud or neglect in income reporting, and the legality of cancelling the imposed penalties under section 271(1)(c) of the Income-tax Act, 1961. The High Court was instructed to dispose of the references based on the statements received from the Tribunal. The judgment concluded with a decision of no order as to costs in the matter.