- (1.) THE Income Tax Appellate Tribunal, Delhi has referred the following question of law under section 256(2) of the Income Tax Act, 1961 (hereinafter referred to as the Act) for opinion to this Court: '1. Whether on the facts and in the circumstances of the case, there was any material on record to sustain the findings of the Income Tax Appellate Tribunal in deleting the penalties under section 271(1)(c) in respect of the assessment years 1978 -79 and 1981 -82 to 1986 -87 and also penalties under sections 271(1)(a) and 273(2)(b) for the assessment year 1986 -87 ?'
(2.) BRIEFLY stated the facts giving rise to the present reference are as follows: The reference relates to the assessment years 1978 -79,1981 -82 to 1986 -87. The present reference arises out of the penalties imposed under section 271(1)(c) for all these years; while the penalty for late filing of the returns, i.e., under section 271(1)(a) of the Act and under section 273(2)(b) of the Act was levied for the assessment year 1986 -87 only. A search and seizure was carried out on the residential premises on 30 -7 -1985 against the husband of the assessee and the lockers with the Central bank of India and Punjab National bank bearing Nos. 259,28 and 29 respectively were also searched. Two of the lockers were in the joint names of the assessee and her husband and the third one was in the name of her husband and a third person. The assessee admitted the undisclosed investment in FDR of Rs. 24,500 and it was submitted by her that although she is in a position to offer explanation regarding the sources of acquisition of fixed deposit receipts but to avoid long drawn out process of litigation, she offered the inclusion of fixed deposit receipts and the interest thereon for the assessment purposes in her hand. An application was moved by her on 13 -2 -1987 and on that basis, the assessee also revised her return on 18 -2 -1987 rectifying the calculation mistake. The revised return was regularized by issue of notice under section 148 on 3 -3 -1987 after obtaining prior approval of the Commissioner of Income -tax. The assessments were concluded on the basis of the applications filed by her on agreed basis.
(3.) PENALTY proceedings were initiated by the Income Tax Officer and ultimately penalty was levied. The Tribunal has set aside the penalty proceedings on the finding that there was no concealment of the particulars of the income by the assessee. The Tribunal found that the Explanation 3 to section 271(1)(c) of the Act is not applicable as the satisfaction of the assessing officer that the assessee had taxable income in earlier years, has not been recorded by the assessing officer.;