- (1.) THE Income-tax Appellate Tribunal has referred the following two questions of law arising out of its order dated August 16, 1994, pertaining to the assessment year 1990-91 : "1. Whether the Income-tax Appellate Tribunal was right in holding that the Explanation under Section 271(1)(c) of the Income-tax Act could be invoked at any stage even if no show cause notice had been issued under the said Explanation and the assessee had no opportunity of meeting the Department's case under the said Explanation ? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in upholding the levy of penalty on the ground that the assessee's explanation as to the expenditure on repairs and maintenance claimed by it was not bona fide and that all the facts relating to the same and material to the computation of its income had not been disclosed by it, without appreciation of the material evidence produced by the assessee ?"
(2.) THE assessee is a firm. THE assessee filed its return of income for the year 1990-91 on August 27, 1990, declaring a total income of Rs. 48,361. THE assessment was, however, completed on March 31, 1991, under Section 143(3) at the figure of total income of Rs. 8,46,361 making the following additions : JUDGEMENT_188_ITR244_2000Html1.htm It is required to be mentioned that the business of the assessee is to run a cinema theatre named Prasanna Theatre. In the first appeal before the Commissioner of Income-tax (Appeals), the first addition as above was reduced to Rs. 6 lakhs whereas the second addition as above was again reduced to Rs. 85,000. The penalty proceedings under Section 271(1)(c) were initiated by the Assessing Officer for concealment of income and furnishing of inaccurate particulars in respect of the abovementioned amount of Rs. 6,85,000. Ultimately, penalty of Rs. 3,47,110 was levied by the Assessing Officer at the minimum level. The appeal filed by the assessee before the Commissioner of Income-tax (Appeals) was dismissed on the facts of the case. The assessee came up in further appeal before the Income-tax Appellate Tribunal. A legal issue was raised by the assessee before the Income-tax Appellate Tribunal that the imposition of penalty under Section 271(1)(c), by resorting to the provisions of Explanation 1 to the said section without giving notice, was illegal. It was argued that as a result of the above action on the part of the Assessing Officer, the assessee had no opportunity to meet the case of the Department. Reliance was placed on the decision in the case of P.M. Shah [1993] 203 ITR 792 (Bom).
(3.) THE Tribunal, on the basis of the facts of the case, came to the conclusion that there was concealment of income and upheld the imposition of penalty but directed that the computation of penalty amount be restricted to the disallowance of Rs. 2,75,720 as sustained by the Income-tax Appellate Tribunal in the quantum appeal. So far as the disallowance with regard to the vehicle maintenance expenditure, the Tribunal held that although the disallowance in that regard had been sustained at Rs. 75,000, the said disallowance was mainly on the ground of absence of supporting vouchers/receipts relating to the expenses and, hence, the provisions of Section 271(1)(c) could not be said to be applicable to such disallowance. By filing a miscellaneous petition, the assessee tried for amendment of the order of the Tribunal. It was the contention of the assessee in the said petition that in the Tribunal's order with regard to the penalty matter, various evidence submitted by the assessee in its paper book supplying detailed information about repair expenses, etc., were not taken into consideration. During the course of the hearing of the miscellaneous petition, it transpired that on account of the fact that in the earlier order of the Tribunal in the quantum appeal, such evidence submitted by the assessee had not been mentioned and that is why in the later order relating to the penalty (under present consideration) also, the said evidence were not mentioned. As per the prayer of learned counsel for the assessee, the Tribunal ordered that a copy of the miscellaneous petition itself be annexed to the order of the Tribunal and that the said annexure should also form a part of the order of the Tribunal.;