- (1.) THE Income -tax Appellate Tribunal, Allahabad, has referred the following question of law under Section 256(1) of the Income -tax Act, 1961 (hereinafter referred to as 'the Act'), to this Court: Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the cancellation of penalty of Rs. 35,000 imposed under Section 271(1)(c) of the Act considered along with Explanation 1 thereto inserted with effect from April 1, 1976 ?
(2.) THE reference relates to the assessment year 1979 -80 in respect of the proceedings initiated for imposition of the penalty under Section 271(1)(c) of the Act. Briefly stated the facts giving rise to the present reference are as follows: This is a case of a firm where certain deposits aggregating to Rs. 53,400 were found in the name of six persons in the books of account of the assessee and these deposits were found to be unexplained and added to the income of the assessee. Besides, another addition of Rs. 19,700 was made on account of unexplained petty expenses. Aggrieved by this order, the assessee filed appeal before the learned Commissioner of Income -tax (Appeals), Agra, who confirmed both the additions with direction that the addition on account of unexplained deposits should be made on the basis of peak credit after giving allowance to the debit entries in the account of the creditors and the addition on account of unexplained cash credit was sustained at Rs. 44,500.
(3.) IN view of the above, the Assessing Officer took the view that there was a concealment of Rs. 64,200 on the part of the assessee for the purpose of Section 271(1)(c) read with Explanation 1 and imposed a penalty of Rs. 35,000 under Section 271(1)(c) of the Income -tax Act, 1961, on the assessee. The assessee filed appeal against the order passed under Section 271(1)(c) before the learned Commissioner of Income -tax (Appeals), Agra, who deleted the said penalty of Rs. 35,000.;