TMI Blog1986 (12) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... upees 2,94,000 was stated to be the peak credit in the relevant assessment year. Rupees 19,782 was also shown in the accounts of the assessee as interest paid to the alleged creditors on the said loans. Such interest was also disclosed to be the income of the assessee in the said assessment year. The Income-tax Officer issued a notice to the assessee under section 143(2) of the Income-tax Act, 1961, on September 29, 1967, and hearing was fixed on November 16, 1967. In making the assessment, the Income-tax Officer took into account the amount of peak credit in the accounts of the assessee prior to April, 1, 1962, and the balance of the peak credit as disclosed, viz., Rs. 1,73,000 was added back as the income of the assessee. The amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion had been initiated by the Revenue. It was submitted further that, in the circumstances, the provisions of section 271(1)(c) of the Income-tax Act, 1961, were not attracted and the penalty imposed should be cancelled. It was contended on behalf of the Revenue before the Tribunal that in the return filed on November 8, 1963, the assessee had not shown the amounts of the said loans as its income and had also claimed deduction of interest paid thereon wrongly. It was submitted that the assessee did not file any revised return and merely because the assessee had made a disclosure which was ultimately rejected, the assessee was not entitled to contend that section 271(1)(c) of the Income-tax Act was not applicable. The Tribunal found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee was only venial and was pardonable. The Tribunal held that the case of the assessee was not one where penalty should be imposed merely because it was lawful to do so and, considering the nature of the breach, held that it would be justified in declining to uphold the penalty. The Tribunal allowed the appeal of the assessee and cancelled the order of penalty. On an application of the Revenue under section 256(2) of the Incometax Act, 1961, the Tribunal, as directed, has referred the following question, as a question of law arising out of its order for the opinion of this court: " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in cancelling the penalty of Rs. 1,27,810 imposed on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there was no deliberate intention on its part to conceal its income and the incorrect return, which was initially filed, was sought to be rectified by its subsequent disclosure, which was noted and acted upon by the Income-tax Officer. It is not mandatory under section 271 of the Income-tax Act, 1961, that penalty must be imposed in every case. If the conditions laid down in the said section are established, then the authority concerned " may direct " that the person committing the default within the meaning of the said section pay the penalty imposed. For the above reasons and on consideration of the facts and circumstances, we are not inclined to interfere with the order which has been passed by the Tribunal, condoning the conduct of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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