R.K.Agrawal, J. - (1.) The Tribunal, Allahabad has referred the following question of law under Section 256(1) of the IT Act, 1961, hereinafter referred to as the Act, for opinion to this Court: "Whether, in the facts and circumstances of the case, was the Tribunal legally right in holding that the provisions of the Explanation to Section 271(1)(o) were attracted to the case ?"
(2.) Briefly stated, the facts giving rise to the present reference are as follows: The reference relates to asst. yr. 1971-72. For the asst. yr. 1971-72, the applicant filed its return of income on 30th Dec, 1971, showing the total income of Rs. 71,870. However, the assessment was completed on an income of Rs. 1,68,350. The penalty proceedings under Section 271(1)(c) were initiated for concealing the particulars of income and a notice was issued on 21st March, 1977. No reply was received. On 4th Oct., 1978, another show-cause notice was issued to the applicant requiring it to show cause as to why the penalty under Section 271(1)(c) of the Act should not be levied. For reasons best known to the applicant, it did not file any reply. The ITO imposed a sum of Rs. 51,314.74 as penalty under Section 271(1)(c) of the Act. The penalty was imposed on the ground that during the course of assessment proceedings, books of account of the firm were scrutinized and on scrutiny of the purchase of goods account appearing at pp. 242-243 and ledger p. 369 revealed that an item of Rs. 51,31474 was debited to the purchase account at ledger p. 242 which was included in the entry of Rs. 2,25,169.58. This amount was transferred to ledger page No. 242 (bearing account) and was debited to the purchase account by interpolation. Thus, the aforesaid amount of Rs. 51,314.74 had been debited twice to the purchase of goods account suppressing the profit to the said extent. No explanation was offered except that it appears to be some compensatory error. In appeal, the CIT(A) deleted the imposition of penalty. The Revenue feeling aggrieved preferred the appeal before the Tribunal. The Tribunal has allowed the appeal.
(3.) We have heard Sri Vikram Gulati, learned counsel for the applicant, and Sri A.N. Mahajan, learned standing counsel appearing for the Revenue.;