TMI Blog1985 (5) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the order under section 263 of the Act when the order of the ITO was erroneous and prejudicial to the interests of the Revenue on account of his failure to initiate penalty proceedings under section 271(1)(c) notwithstanding a clear confession of concealment of true particulars of income on the part of the assessee by the act of surrendering the cash credit appearing in the name of M/s. Bherunath Mohanlal Co. as a havala entry ? The assessee-respondent is a registered firm comprising of five partners. During the course of assessment proceedings for the assessment year 1977-78, the Income-tax Officer (ITO) came across a cash credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to buy peace of mind and avoid prolonged litigation and not because the same was bogus. It was further submitted that the Income-tax Officer was justified in not initiating penalty proceedings under section 271 (1)(c) of the Act. The Commissioner of Income-tax was of the opinion that there were no sound reasons for not initiating penalty proceedings under section 27](1)(c) for which a prima facie case existed and that the penalty proceedings could only have been initiated in the course of the assessment proceedings and since the Income-tax Officer has not applied his mind to this aspect, he committed an error and the completion of assessment was erroneous which requires interference under section 263 of the Act. In support of the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Officer was not erroneous and prejudical to the interests of the Revenue in not recording the initiation of penalty proceedings under section 71 (1)(c) in the order passed by him. We, therefore, cancel the order passed by the CIT, under section 263. " An application under section 256(1) of the Act was filed by the Commissioner before the Tribunal to refer the aforesaid question to this court for its opinion. The Tribunal, by its order dated August 12, 1983, rejected the reference application holding that the issue involved in the assessee's case was similar to the one which was involved in Paras Fabrics, Pali's case and in that case, the assessee had relied on Addl. CIT v. J.K. D'Costa [1982] 133 ITR 7 (Delhi), whereas the Revenue had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated November 26, 1982, as the Tribunal itself has followed its earlier decision rendered in Paras Fabrics, Pali's case relating to the assessment year 1977-78. The Tribunal preferred the view taken in J. K. D'Costa's case [1982] 133 ITR 7 and did not follow the contrary view taken in Indian Pharmaceuticals' case [1980] 123 ITR 875 (MP). On the other hand, Mr. R. Balia, learned counsel appearing for the assessee, has stoutly opposed the submission and urged that no referable question of law arises out of the order of the Tribunal dated November 26, 1982, for the special leave petition by the Department against the judgment in J. K. D'Costa's case [1982] 133 ITR 7 was dismissed by the Supreme Court in CIT v. J. K. Da Costa (S.L.P. (Civil) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h assessment to initiate penalty proceedings. As the position stands concluded and settled by the Supreme Court, the question which is now sought to be referred by the Commissioner of Income-tax cannot be said to be a substantial question of law arising out of the Tribunal's order. It is only a question of academic nature. In this view of the matter, it cannot be said that the decision of the Tribunal rejecting the reference application by its order dated August 12, 1983, is incorrect. For the reasons aforesaid, no referable question of law arises out of the order November 26, 1982, of the Tribunal. The reference application under section 256(2) of the Act filed by the Commissioner of Income-tax is, therefore, dismissed. The parties ..... X X X X Extracts X X X X X X X X Extracts X X X X
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