- (1.) ON August 1, 1988, the assessee filed its return for the assessment year 1988-89. It returned an income of Rs. 79,270. ON November 22, 1988, the assessment under Section 143(1) of the Income-tax Act, 1961, was completed. ON March 9, 1989, the assessee filed a revised return disclosing an additional income of Rs. 2,50,000. The assessment was finalised under Section 143(3) of the Act vide order dated March 26, 1990. Penalty proceedings were initiated under Section 271(l)(c) of the Act. Vide order dated August 17, 1990, a penalty of Rs. 1,60,000 was imposed.
(2.) AGGRIEVED by the order of penalty imposed by the assessing authority, the assessee filed an appeal. The Commissioner of Income-tax (Appeals) vide order dated March 12, 1991, held that the assessee had filed the revised return and voluntarily surrendered the entire amount "before the investigation unit had given conclusion regarding concealment in this case . . ,". It was also noticed that along with the voluntary return, the assessee had paid the additional tax because it "wanted to buy peace and expected a lenient treatment from the Department in view of the voluntary nature of its admission of mistake in accounts ... ". It was further found that notice "under Section 148 was issued long after the appellant had filed its revised return surrendering the amount of Rs. 2,50,000. Another important factor is that even while finalising reassessment on the second return, the Assessing Officer had accepted the account books after thorough scrutiny". On the basis of these findings, the appellate authority concluded that "this was not a fit case for the levy of penalty under Section 271(l)(c) of the Income-tax Act, 1961". The Revenue challenged the order before the Tribunal. There was difference of opinion. By a majority, the claim of the assessee was accepted and the appeal filed by the Revenue was dismissed. Thereupon, the Revenue filed a petition under Section 256(1) of the Act praying that the following question of law be referred to the High Court for its opinion : "Whether, in the facts and circumstances of the case, the Income-tax Appellate Tribunal was right in deleting the penalty despite the fact as observed by the Judicial Member that the assessee revised the return only when investigations were started by the Department and another fact that the assessee had no funds to purchase the demand drafts as mentioned by the Assessing Officer in the assessment order which was before the Income-tax Appellate Tribunal ?"
(3.) THE matter was examined at length by the Tribunal. It was noticed that the majority had found the following amongst other facts : 1. THE Members constituting the Division Bench are agreed on the fact that the drafts although not accounted for on the dates of actual purchase were accounted for subsequently in the books of account. 2. THE accountant of the assessee was an old person who did not write books of account on day-to-day basis and the non-accounting of the drafts on the correct dates was squarely attributable to him. 3. THE assessee had filed the revised return prior to the date of issue of notice under Section 148 and in the said revised return the sum of Rs. 2,50,000 had been offered for taxation. 4. THE assessee had offered the entire amount for taxation without working out the peak and getting some consequential benefit.;