1991-VIL-606-ALH-DT

Equivalent Citation: [1991] 190 ITR 402, 55 TAXMANN 328

ALLAHABAD HIGH COURT

Date: 04.01.1991

COMMISSIONER OF INCOME-TAX

Vs

NEPANI BIRI COMPANY TRUST

BENCH

Judge(s)  : B. P. JEEVAN REDDY., R. A. SHARMA 

JUDGMENT

The judgment of the court was delivered by

B. P. JEEVAN REDDY C. J.-Under section 256(2) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal has stated the following question :

"Whether, on the facts and circumstances of the case, the Incometax Appellate Tribunal, Delhi Bench, was justified, for the reasons mentioned in paragraph 5 of its order, in cancelling the penalty under section 271 (1) (c) of the Income-tax Act, when the addition of Rs. 96,563 was confirmed in ex parte assessment under section 144 ?"

The assessee is a Muslim waqf. For the assessment year 1969-70, there was a dispute between the mutawalli and the manager on account of which the accounts of the assessee were not produced before the Income-tax Officer. Each of the two persons claimed that the account books were with another person and were not with either of them. In the circumstances, the Income-tax Officer completed the assessment on the basis of the material on record, i.e., best judgment assessment. While doing so, he disallowed various expenses claimed by the assessee. Ultimately, the assessment was completed on an amount of Rs. 7,30,571 as against Rs. 1,25,456, the income returned.

On appeal, the Appellate Assistant Commissioner deleted the additions to a very large extent. On second appeal, the Tribunal gave further relief. The income of the assessee as finally determined stood at Rs. 2,22,017. The difference thus between the income returned and the income assessed was Rs. 1,36,561. This sum represented various expenses claimed by the assessee but disallowed by the Income-tax Officer. Proceedings for penalty under section 271 (1) (c) of the Income-tax Act were taken. The Inspecting Assistant Commissioner levied a penalty of Rs. 1,90,000 on the assessee. On appeal, however, the Tribunal found that no penalty was leviable inasmuch as there was no concealment of income or wilful negligence on the part of the assessee. It opined that certain expenses claimed by the assessee were disallowed by the Income-tax Officer which led to the difference between the income returned and the income assessed and that, in such circumstances, the penalty under section 271(1)(c) could not be levied. We see no reason to differ from the view taken by the Tribunal which is in accordance with the facts of the case.

In the result, the reference is answered in the affirmative, that is, in favour of the assessee and against the Revenue. No costs.

 

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