TMI Blog1980 (11) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the Income-tax Appellate Tribunal, in the absence of an appeal by the department, could impose a penalty with respect to item No. 2, regarding business profits in respect of which the petitioner had been absolved of any liability as per the order of the Inspecting Assistant Commissioner? " It is common ground that in case question No. 2 is answered in favour of the assessee, the need to answer the other question does not arise. The assessee was carrying on business in steel and hardware. In respect of the assessment year 1961-62, corresponding to the accounting year Diwali 1959, to Diwali 1960, the assessee filed a return showing the total income under the head of business income alone as Rs. 4,434. The assessee also filed a sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two additions under the heads of " Accretion to capital " and " Investment in properties " do not attract any penalty and the same were, therefore, set aside. The Tribunal, however, proceeded to levy penalty on the addition of Rs. 35,258, made under a different head, namely, business income, in respect of which the IAC had not imposed any penalty and no proceeding was taken by the department by way of an appeal or cross-objection. The assessee being aggrieved by the imposition of penalty under fresh head by the Tribunal in its appeal against the IAC's order, annex "D", applied for a reference to this court. The Tribunal declined to make a reference, which led the assessee to apply under s. 256(2) of the I.T. Act, 1961, to this court for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. But this was admittedly not, done and, therefore, the question of imposing any penalty in respect of the addition made under the head of business income did not arise for decision. Since the imposition of penalty by the Tribunal under the new head of business income was beyond the scope of the appeal, the same was levied illegally and has to be set aside. As a result of the Aforesaid discussion, the above quoted question No. 2 has to be answered in the negative in favour of the assessee and against the department. For this reason, question No. 1 does not arise for decision and need not be answered. This reference is, accordingly, answered in the assessee's favour, who also shall get the costs of this reference. Counsel's fee shal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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