M.M.KUMAR, J. - (1.) THE Income -tax Appellate Tribunal, Amritsar Bench, Amritsar (for brevity, 'the Tribunal') in exercise of jurisdiction under s. 256(1) of the IT Act, 1961 (for brevity, 'the Act') has referred the following questions of law for determination of this respect of asst. yr. 1987 -88 : "1. Whether, on the facts and in the circumstances of the case, the learned Tribunal is justified in law in dismissing the appeal of the Revenue whereby upholding the action of the CIT(A) in deleting the penalty imposed under s. 271(1)(c) of the IT Act, 1961, holding that there was neither any concealment nor default for furnishing inaccurate particulars of income ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in confirming the deletion by the CIT(A) of the penalty imposed under s. 271(1)(c) of the IT Act, 1961 holding that the AO had not correctly interpreted the case McDowell and Co. Ltd. vs. CTO (1985) 47 CTR (SC) 126 : (1985) 154 ITR 148 (SC) -
(2.) THE assessee is a partnership firm consisting of six partners including Shri Brij Mohan Singh, etc. The assessee income of Rs. 2,94,720 for the asst. yr. 1987 -88. The income was assessed by the AO at Rs. 7,81,110 under s. 143(3) of the Act, which included addition of Rs. 4,70,135 made by the AO. The AO treated the additional income of the assessee as concealed income alleging that the assessee had furnished inaccurate particulars. As such, the AO initiated penalty proceedings under s. 271(1)(c) of the Act during the course of assessment. A penalty notice was served upon 2,35,047 upon the assessee. The assessee challenged the order of the AO in appeal before the CIT(A), Jalandhar, who
(3.) THE Revenue challenged the order of the CIT(A), Jalandhar, by filing an appeal before the Tribunal. The Tribunal "6. In the case in hand, the receipt of Rs. 4,70,135 is the bone contention and that receipt was shown by the assessee during 1986 -87 on accrual basis after effecting the change in the method of accountancy. The learned Departmental Representative was not able to point out any provision in which permission of the AO was required in the year under consideration to effect the change of accounting system. The important fact was whether the assessee had shown the receipt or not. The assessee had shown it in the asst. yr. 1986 -87 and the Department has accepted that receipt on accrual as assessment was completed under s. 143(3) of the Act. If there was anything abnormal in that year, the AO should not have included that receipt in the assessment of asst. yr. 1986 -87. However, the assessee in the year under consideration offered before the AO for inclusion of this receipt of Rs. 4,70,135 in the year under consideration with consequential adjustment of that amount in the assessment of asst. yr. 1986 -87 and without any penalty. This offer was quite genuine and bona fide. There is no occasion for any concealment or furnishing of inaccurate particulars. Further, the ratio of the Hon'ble Supreme Court in the case of McDowell & Co. (supra) has not been correctly interpreted by the AO as every citizen is allowed to adjust his tax planning so as to reduce its burden of tax. In the case in hand, the AO or the learned Departmental Representative has failed to point out as to what was wrong in planning the affair in the way the assessee did in both the assessment years and what loss the Revenue has suffered. Accordingly, no question of concealment of any income nor any default for furnishing inaccurate particulars of income is there. The result is that the appeal is without any force and the same is dismissed." A perusal of the aforementioned finding recorded by the Tribunal shows that the receipt of Rs. 4,70,135 was reflected by the assessee in the assessment for the asst. yr. 1986 -87 on accrual basis after effecting the change in the method of accounting and no permission for the change of accounting system was required to be obtained from the AO. The Department has also accepted the receipt as the assessment was completed under s. 143(3) of the Act. Moreover, offer made by the assessee for adjustment of the amount in the assessment year under consideration, was not accepted by the AO, which has been considered by the Tribunal to be genuine and bona fide and, therefore, there was no question of concealment or furnishing of inaccurate particulars within the meaning of s. 271(1)(c) of the Act. In the teeth of these categorical findings of fact, it is not possible to conclude that s. 271(1)(c) of the Act would be attracted to the facts of the present case. Therefore, it cannot be opined that the Tribunal was not justified in law in dismissing the appeal of the Revenue.;