R.K. Gulati, J. - (1.) THESE are two cross-applications under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), one filed by the assessee and the other by the Commissioner of Income-tax, Kanpur. We shall deal with these applications separately.
(2.) THE assessee is a partnership firm. THE dispute relates to the assessment year 1975-76 and arises out of penalty proceedings under Section 271(l)(c) of the Act. THE following two questions have been proposed in the application filed by the assessee : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in not cancelling the penalty order of the Income-tax Officer under Section 271(1)(c) of the Income-tax Act, 1961, relating to the assessment year 1975-76 on the ground that the penalty orders were illegal and not according to law ? (2) Whether, in view of the fact that the Income-tax Officer had levied a penalty below the minimum limit and as such the order of the Income-tax Officer was illegal, the Tribunal was legally correct in not quashing the order ?" Briefly stated, the relevant facts are these : Against the returned income of Rs. 1,81,260, the assessment was originally completed, after giving effect to the appellate order, at Rs. 1,90,071. Subsequently, a search was conducted at the premises of the firm when account books for the assessment years 1981-82 and 1982-83 were seized. Later on, in pursuance of summons under Section 131 of the Act, the assessee produced certain account books for the year in question which were impounded by the assessing authority. While the scrutiny of the seized/impounded books of account was in progress, the assessee came forward with a petition under Section 273A of the Act, disclosing an additional income of Rs. 1,90,000. Thereupon, the assessment was reopened under Section 148 of the Act. In the course of assessment proceedings, the assessee filed its return declaring a .total income of Rs. 3,85,783. The assessment was, however, completed on a total income of Rs. 4,65,726 making, inter alia, an addition on account of duplicate purchases debited in the purchase account, Rs. 1,29,689 being bogus purchases debited in the purchase account, Rs. 59,100 being unexplained cash credit and Rs. 55,311 and Rs. 24,626 on account of profit on suppressed sales. On the quantum side, the Income-tax Appellate Tribunal confirmed the reassessment order in its entirety except in respect of the amount of Rs. 24,626 aforesaid in relation to which the matter was restored to the Income-tax Officer for a very limited purpose to check and remove totalling errors, etc., of which the assessee had made a complaint before the Tribunal. While completing the reassessment order, the Income-tax Officer had initiated penalty proceedings for concealment of income and, in due course, a penalty of Rs. 1,06,417 was imposed which was confirmed by the Income-tax Appellate Tribunal. On refusal of the Tribunal to state the case and the aforesaid questions, the assessee has approached this court.
(3.) HAVING heard learned counsel for the assessee, we are not satisfied that any one of the two questions set out earlier are questions of law in respect of which the Tribunal should be called upon to submit a statement of the case to this court. The only defence put forward by the assessee in the penalty proceedings was that its account books were maintained by its accountant in Punjabi Muria which none of the partners knew and on account of which they could not detect the mischief being committed by the accountant. To substantiate this plea, the argument advanced was that if the assessee knew that some hanky-panky was involved in its accounts, particularly in those books which were with the assessee and which had neither been seized nor found in the search, it would have destroyed the said books rather than produced them before the Income-tax Officer in pursuance of the summons. The assessee pleaded its ignorance about the concealed income and urged that there was no mens rea aimed at defrauding the Revenue and concealment of income and that, therefore, it was not a case fit for imposition of penalty.;