SATISH KUMAR MITTAL, J. - (1.) THE Income -tax Appellate Tribunal, Chandigarh Bench, Chandigarh (hereinafter referred to as the 'Tribunal'), has 968/Chandi/1988, in case of the assessee, relating to the asst. yr. 1979 -80, for opinion of this Court : "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in deleting penalty imposed under s. 271(1)(c) when addition made by the AO has been upheld by the Tribunal -
(2.) THE facts of the case are that the assessee was doing the business of commission agent and was a dealer in foodgrains, cotton and rice, etc. The assessee had earned certain commission in its commission agency business. Besides the commission earned in such business, profit of Rs. 1,26,963 was also earned in four transactions. Before the AO, the assessee claimed that profit was passed on by it to those persons on whose behalf transactions had been done. The assessee did not include the said amount of profit in its income. The AO, after rejecting the plea of the assessee, included the said amount to the income of the assessee.
(3.) FEELING aggrieved against the order of the AO, the assessee filed appeal before the Commissioner of Income -tax (Appeals) [hereinafter referred to as 'the CIT(A)'] who deleted the aforesaid addition in part. The Tribunal, in appeal by the Revenue, set aside the order of the CIT(A) and upheld the order of the AO, after holding that the profit earned in transactions in question was actually belonging to and was income of the assessee. Thus, the addition made by the AO was sustained. For the abovesaid addition, penalty proceedings were also initiated against the assessee under s. 271(1)(c) of the Act. The AO imposed a penalty of Rs. 71,650. On appeal filed by the assessee, the CIT(A) deleted the penalty, while observing that the assessee disclosed all the facts relating to the transactions done by four persons in the commission agency of the assessee. The assessee had duly credited the amount of commission, received in four transactions, in its commission account. The concerned parties had shown the profits in their cases. Therefore, it was found that the explanation furnished by the assessee was bona fide and his case is fully covered by the proviso to Expln. 1 inserted vide Taxation Laws (Amendment) Act, 1975. the appeal, while observing as under : "We have considered the rival contentions and the decisions of various High Courts, referred to above, and we find that here in the case before us there is no question of any additional evidence required for the levy of penalty. What the assessee is claiming here is that the explanation given in respect of the disputed transactions must be examined in the light whether it was a bona fide one. Mere fact that it has been rejected by the Tribunal in quantum appeal, could not deter the Tribunal in any independent proceedings to find out if the explanation appeared to be genuine. Since the transactions were of a complex nature in view of the business of commission agency, an interpretation given to these transactions could not render the claim of the assessee to be devoid of bona fides. The learned counsel has argued that therefore, it must be seen whether the assessee had disclosed all the facts relating to the transactions in a bona fide and true manner. If it is so found, the penalty was not exigible. An adverse view might have been taken in the quantum appeal but the question in the penalty proceedings is not the same but the entire material has to be examined in the light of s. 271(1)(c) of the Act. The main thrust of the argument of the learned counsel is that the entire details in respect of parties and sales and purchases were recorded in the books of account and were disclosed. There was nothing which could be called to be concealment on the part of the assessee. He has, therefore, submitted that the case of the assessee is covered by the proviso to Expln. 1 to s. 271(1) of the Act.;