AJIT K.SENGUPTA,J. - (1.) IN this reference under S. 256(2) of the IT Act, 1961 for the asst. yr. 1976-77 the following question of law has been referred to this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalty of Rs. 1,25,000 under S. 271(1)(c) of the IT Act, 1961?
(2.) SHORTLY stated the facts are that the assessee had disclosed an income of Rs. 3,40,91,566. The total income was computed by the ITO at Rs. 2,63,86,000 on 21st Jan., 1980. The assessee being aggrieved went in appeal before the CIT(A) and the Tribunal, and after the order of the Tribunal the total income was determined at Rs 3,53,25,310. The ITO initiated penalty proceedings in the course of assessment under S. 271(1)(c) of the Act and issued notice to the assessee. The assessee filed various replies and, in short, the assessee indicated that it did not conceal any income or it filed any inaccurate particulars of income. The variation in the total income assessed and finally determined had arisen due to various disallowances made by the ITO. The ITO did not accept the assessee's contention. He discussed each addition and disallowance in the assessment order finally sustained by the Tribunal and, therefore, he found that the assessee concealed income within the meaning of S. 271(1)(c) of the Act as follows : Accordingly, the ITO calculated the tax on the said income and, consequently, imposed a penalty of Rs. 3,67,997.
(3.) THE assessee came up in appeal before the CIT(A)and reiterated the arguments made before the ITO that no concealment of income had been made by it and all the additions and disallowances were made by mere disbelieving the explanation of the assessee. It was further submitted that it had not been proved that the aforesaid amounts were not spent by the assessee or that the assessee had concealed the income under the above heads. The CIT(A) by discussing all the items felt satisfied about item numbers 1, 2, 3, 6 and 7. But he, after considering the order of the Tribunal in the quantum appeal, found that the assessee concealed the following particulars : . . Rs. 1. Repairs to buildings 1,00,000 2. Barbad wire fencing 32,585 3. Fire hydrant expenses 19,700 4. Closing stock discrepancy in wrapper paper 25,000 5. Shortage in kokat wood account 1,00,000 6. 80J allowance 2,48,013 7. Difference in depreciation 1,11,624 . . 6,37,225 (1) Closing stock discrepancy in wrapper paper, and 25,000 (2) Shortage in kokat wood account 1,00,000 ;