GULATI,J. - (1.) THE assessee is a registered firm which is engaged in the manufacture and safe of ploughs, chaff cutters, Kolhus and karhas. The ITO did not accept the assessee's accounts books and made certain additions in the ploughs and karhaos account by applying a gross profit rate of 20 per cent to the sales of those articles. On appeal the AAC reduced the rate to 15 per cent. On seconal appeal the Tribunal maintained only an addition of Rs. 6,500 to the returned income. In the meantime the ITO initiated proceedings under S. 271(1)(c) for levying penalty for concealment of the income and the IAC, to whom the case was referred, levied a penalty of Rs. 12,243 on appeal the Tribunal found that there was no data before it to show that the income returned by the assessee was less than 80 per cent of the correct income and as such it was not sure whether the explanation to S. 271(1)(c) of the Act would apply. The Tribunal further observed that it was not material whether the explanation applied or not because on the facts the charge of concealment could not be sustained. It accordingly set aside the penalty. However at the instance of the CIT it has referred the following question of law for the opinion of this Court. "Whether on the facts and in the circumstances of the case the Tribunal was right in law in vacating the penalty levied under S. 271(1)(c) read with the Explanation.?"
(2.) IN the connected IT Ref. No. 15, of 1973 we have explained the legal position. We have held that if Expln. of S. 271(1)(c) is not attracted then cases of estimates and best judgment assessment do not normally attract the penal provision contained in S. 271(1)(c). In the instant case there is no finding by the Tribunal that the explanation was still applicable after the relief allowable by it in appeal. If the explanation goes out of the way the case clearly does not come with in the mischief of S. 271(1)(c) because on the facts it cannot be said that the Department has proved the charge of concealment. The learned counsel for the Department was also not attempted to show that the explanation is still applicable. In these circumstances the question referred to us has to be reframed so as to leave out the reference the explanation. We, accordingly reframe the question to read :- "Whether on the facts and in the circumstance of the case the Tribunal was right in law in vacating the penalty levied under S. 271(1)(c) ?" and answer the same in the affirmative in favour of the assessee and against the Department. The assessee is entitled to costs which we assess at Rs. 200. Copyright 2000 Current Database Media, All Rights Reserved.;