1997-VIL-234-BOM-DT

Equivalent Citation: [1998] 230 ITR 48

BOMBAY HIGH COURT

Date: 16.07.1997

COMMISSIONER OF INCOME-TAX

Vs

ASK ENTERPRISES

BENCH

Judge(s)  : DR. B. P. SARAF., DR. PRATIBHA UPASANI 

JUDGMENT

The judgment of the court was delivered by

DR. B. P. SARAF J. --- By this application under section 256(2) of the Income-tax Act, 1961, the Commissioner of Income-tax, Pune, seeks a direction to the Income-tax Appellate Tribunal to state the case and refer the following questions of law to this court for opinion :

" 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the penalty under section 271(1)(c) holding that an inadvertent mistake committed by the assessee cannot be equated with an act of concealment?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in camouflaging the fact of concealment by inadvertent and bona fide mistake? "

We have heard Mr. Khatri, learned counsel for the Revenue, and Mr. Bhujle, learned counsel for the assessee. We have also perused the order of the Tribunal on the merits as well, as the order rejecting the reference application under section 256(1) of the Income-tax Act.

So far as question No. 2 is concerned, Mr. Khatri, learned counsel for the Revenue, fairly stated before us that the same does not arise from the order of the Tribunal and in that view of the matter, question No. 2 is not a referable question of law.

So far as question No. 1 is concerned, in our opinion, the said question is also not a referable question of law as the answer thereto is obvious.

The law is well-settled that an order imposing penalty is a result of a quasi-criminal proceeding, and penalty should not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct, contumacious or dishonest, or acted in conscious disregard of its obligation. In Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26, the Supreme Court has held that the penalty should not be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. It was held by the Supreme Court that even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose the penalty, when there is a technical or venial breach of the provisions of the Act or when the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. It was further held that if the assessee was acting in honest and genuine belief in a particular manner, then no penalty could be imposed.

In the instant case, there is a categorical finding of the Commissioner of Income-tax (Appeals) to the effect that the mistake of not including the value of titanium dioxide in the closing stock was inadvertent and bona fide and, therefore, did not lead to any concealment on the part of the assessee. It was on the basis of this finding of the Commissioner of Income-tax (Appeals) that the appeal of the Revenue was dismissed by the Income-tax Appellate Tribunal. The decision of the Tribunal affirming the above order of the Commissioner is thus based on an uncontroverted finding of fact. That being so, the question sought to be referred is a pure question of fact which cannot be referred to this court for opinion under section 256 of the Act. The Tribunal was, therefore, justified in refusing to refer the same.

In the result, this application stands rejected. No order as to costs.

 

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