- (1.) THIS is an application under Section 256 (2) of the I. T. Act, 1961 (hereinafter referred to as the Act), because the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar, refused to state the case under Section 256 (1) of the Act, on the ground that no question of law arises out of the order dated 5th April, 1973.
(2.) THE Income-tax Appellate Tribunal dismissed the application with the following observations : " Now, no question of law can be referred to the High Court under Section 256 (1) of the Income-tax Act, 1961, unless it arises out of the order of the Tribunal. A question of law can be said to arise out of the Tribunal's order only if it is dealt with by the Tribunal or is raised before it though not decided by the Tribunal (see [1961] 42 ITR 589 (SC)--CIT v. Scindia Steam Navigation Co. Ltd.), Now, in the present case, there were only two questions for consideration before the Tribunal in the appeal filed before it. The first was whether the assessee had concealed its income and the second was what should be the quantum of penalty. The Tribunal decided the first question against the assessee. As regards the second question the Tribunal held that the minimum penalty as worked out by the IAC at Rs. 8,550 was incorrect and that the same in fact amounted to Rs. 2,000. The Tribunal, therefore, reduced the penalty from Rs. 8,550 to Rs. 5,500. The assessee does not seek reference on either of these findings as given by the Tribunal. The question of law which the assessee required the Tribunal to refer to this High Court is whether no penalty was leviable under Section 271 (1) (c) when its finally assessed income of Rs. 38,140 was below the taxable limit of Rs. 40,000 for a registered firm. This point was not raised by the assessee before the Tribunal in the appeal filed by it. Nor did the Tribunal give any finding on the same in its order dated 5-4-1973. That being so, it cannot be said that the question of law on which the assessee seeks reference arises out of the order dated 5-4-1973 of the Tribunal, In this view of the matter, we decline to state the case and refer the question of law, as proposed by the assessee, to the High Court. "
(3.) THE learned counsel for the applicant has been unable to show as to how a question of law arises out of the order of the Tribunal dated 5th April, 1973. His argument is that after this order he made an application for rectification, which was dismissed by the Tribunal, vide its order dated 1st June, 1973. According to him, in that rectification application he raised many points of law which he wanted the Tribunal to refer under Section 256 (1) of the Act to this court. This contention of the learned counsel is wholly misconceived, as a question of law arising out of the order dated 5th April, 1973, only can be sought to be referred to this court. He, therefore, never approached the Tribunal for this purpose. The question of law that he wanted to be referred by the Tribunal is as under : " Whether, under the facts and circumstances, any penalty is leviable under the provisions of Section 271 (1) (c) of the Act on a firm where there is no tax payable by the firm on account of the firm's finally determined income remaining well below the taxable limit? If the answer is in the affirmative, whether under the facts and circumstances, the Tribunal has exceeded its limit in enhancing the penalty imposed by the department at the minimum figure to a higher figure ? ";