- (1.) By this application under Section 256(2) of the Income-tax Act, 1961, the following questions are referred for our opinion : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law to conclude that there was no mens rea on the part of the assessee-company to conceal the interest income from the Revenue?"
(2.) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee did not conceal any income and, therefore, the imposition of penalty under Section 271(1)(c) of the Income-tax Act, 1961, was not proper ?" 2. The assessee is a company and maintains its accounts on the mercantile system. The assessment was completed under Section 143(3) of the Income-tax Act at nil income. All the assets of the tea estates were sold before the previous years relevant to all assessment years. After completion of the assessment, it came to the notice of the Income-tax Officer that some interest was receivable by the assessee on the amount of sale proceeds of the tea estates from Saharaj Tea Co. Ltd., and some interest from W. S. Cresswell and Co. Ltd. Therefore, in the reassessment, the interest receivable on the sale proceeds amount and the interest receivable from Cresswell Co. Ltd. were taxed and penalty proceedings for concealment, under Section 271(1)(c), were initiated and finally the penalties for the assessment years 1976-77, 1977-78, 1978-79, 1979-80 and 1981-82 were imposed.
(3.) The case of the assessee is that the amounts of sale proceeds payable by Saharaj Tea Co. Ltd., was under litigation. Only one instalment has been paid and the balance amount has not been paid even today, the matter is pending in the court. No interest has been received and similarly, no interest has been received from Cresswell and Co. Ltd. The assessee also brought to the notice of the Assessing Officer that the assessee had no income except this interest income in these relevant years and he changed his method of accounting from mercantile to cash. No amount of cash had been received during the previous year relevant to the assessment years, therefore, no taxable income arose in the hands of the assessee.;