TMI Blog1998 (7) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... stood at the relevant time, the Tribunal was right in cancelling the penalty of Rs. 4,35,850 under s. 271(1)(c) of the IT Act, 1961, for the asst. yr. 1966-67 ? 2. Whether the Tribunal's finding that the assessee had not concealed its income and not committed gross or wilful neglect is based on valid and relevant materials and is sustainable in law ? 3. Whether the Tribunal was right in holding that the IAC had no jurisdiction to levy penalty on 26th Aug., 1976, in the assessee's case even though the penalty proceedings were initiated and referred to the IAC before 1st April, 1976 ?" 3. The third question can be disposed of first as the legal position has been authoritatively settled by the apex Court in the case of CIT vs. Smt. R. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that the firm M/s Maeximpo was only a dummy, the object of which was to divert the income of the assessee and that the firm had not rendered any services warranting any payment made to it. On appeal, appellate authority reversed the order of the ITO, and on further appeal, the Tribunal upheld the additions made to the income returned by the assessee not on the ground that the other firm M/s Maeximpo was a dummy and it has been set up to divert the income of the assessee, but on the ground that the induction of the intermediary was not warranted on commercial considerations and the entire income including the amounts shown as having been received by M/s Maeximpo should be assessed in the hands of the assessee. 7. After the Tribunal passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out for the purpose of assessee's business or not. Mere disallowance of that expenditure, treating it as a part of the income as held by the Tribunal, did not amount to fraud in the absence of any other evidence. The penalty that was imposed by the IAC was solely on the basis of the earlier order of the Tribunal without any other material being available in the records examined by him. 9. It has been held by the Supreme Court in the case of Sir Shadilal Sugar General Mills Ltd. vs. CIT (1987) 64 CTR (SC) 199: (1987) 168 ITR 705 (SC) : TC 50R.300 that every addition to the income of an assessee does not warrant such addition being treated as concealment of income. As observed by the apex Court. 'there may be a hundred and one reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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