Mahendra Bhushan, J. - (1.) THIS is an application moved by the Commissioner of Income-tax, Jaipur, under Section 256(2) of the I.T. Act, 1961 (Act No. 43 of 1961) (hereinafter referred to as "the Act"), requiring the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, to state the case and to refer the following point of law allegedly arising out of the order of the Tribunal to this court, for our opinion :
(2.) WHETHER, in the facts and circumstances of the case, the Tribunal was justified in cancelling the penalty of Rs. 85,000 imposed by the Inspecting Assistant Commissioner under Section 271(1)(c) of the Income-tax Act, 1961 ?" 2. Briefly stated, the facts of the case, out of which this application arises, are these : One Dr. L.M. Simlot (since dead), now represented by his two sons and widow (hereinafter referred to as "the assessee"), was an individual medical practitioner and in the relevant assessment year 1966-67 was in the employment of the Government of Rajasthan at Moti Katla Dispensary, Jaipur, and apart from the salary income, he had also income from private practice. The said assessee was not keeping accounts of his private practice for the relevant assessment year 1966-67. The assessee filed several returns declaring his income from profession, which varied from Rs. 50,000 to Rs. 25,000 but finally the assessee declared his income from profession at Rs. 48,802 in his return dated April 12, 1968. According to the assessee, gross professional receipt was Rs. 93,302, but he had actually realised Rs. 50,802. A deduction of Rs. 2,000 towards expenses was claimed to arrive at the net figure of Rs. 48,802 in the return of income. Information was gathered by the ITO to the effect that the assessee had issued essentiality certificates to the employees of the postal department, and gross receipts were Rs. 1,09,489. The assessee was confronted with these figures on October 6, 1967, and was allowed to rebut the figures, but he simply replied that he got only the amount shown by him in his final return, and the same was recorded in his registers. The ITO relying on the amount of fees received by the assessee, as shown in the registers of postal department, on the basis of essentiality certificates issued by the assessee, held that the assessee received from the postal department an amount of Rs. 1,09,489. The assessee was assessed accordingly. The assessee filed an appeal before the AAC, C-Range, Jaipur, who confirmed the assessment made by the ITO and dismissed the appeal of the assessee. Thereafter, an appeal was preferred by the assessee in the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, and the Tribunal partly accepted it and held that it will be fair and just and well meet the ends of justice, if the Tribunal estimated non-recovery as Rs. 2,489. It was, therefore, held that the real income which the assessee earned during the relevant year from private practice would be Rs. 1,05,000. It appears that penalty proceedings under Section 271(1)(c) of the Act on the ground that the assessee had concealed particulars of his income, or furnished inaccurate particulars of such income, were initiated by the ItO against the assessee, and as the minimum penalty leviable exceeded Rs. 1,000, he referred the same to the IAC, Jaipur Range-I, Jaipur, who, vide his order dated October 6, 1972, imposed a penalty of Rs. 85,000 on the assessee. The petitioner preferred an appeal to the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, which, vide its order dated May 31, 1976, accepted the same and the order of the IAC imposing a penalty on the assessee was set aside. An application under Section 256(1) of the Act by the Commissioner, Rajas-than (II), Jaipur, was filed before the Appellate Tribunal to refer for the opinion of this court the question of law, referred to above. The Tribunal, vide its order dated December 17, 1976, refused to make a reference to this court on the ground that the question suggested for reference is purely a question of fact. As already observed above, the Commissioner has moved this court under Section 256(2) of the Act.
(3.) THE contention of Mr. Mehta, the learned advocate for the Revenue, is that the question sought to be referred to this court is a question of law, inasmuch as the finding of fact arrived at by the Tribunal is merely based on conjectures and surmises, and is perverse. In support of his contention, that if the finding of fact arrived at by the Tribunal is perverse, then it is a question of law, which should be referred for opinion to this court, the learned advocate has placed reliance on Oriental Investment Co. P. Ltd. v. CIT [1969] 72 ITR 408 (SC), CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC), G. Venkataswami Naidu & Co. v. CIT [1959] 35 ITR 594 (SC) and CIT v. Dr. A.K. Sharma (Certified copy of the judgment (order) dated July 31, 1979, in D.B.I.T. Ref. Case No. 64 of 1978) (see p. 23 infra). On the contrary, the learned advocate for the assessee contends that whether or not the assessee had concealed the particulars of income is purely a question of fact, which does not call for any reference. In support of his contention, the learned advocate has placed reliance on CIT v. Gokuldas Harivallabhdas [1958] 34 ITR 98 (Bom), Addl. CIT v. Gem Palace [1975] 98 ITR 640 (Raj), Addl. CIT v. Noor Mohd. & Co. [1974] 97 ITR 705 (Raj) and CIT v. Goswami Smt. Chandralata Bahuji [1980] 125 ITR 700 (Raj). It may be stated at the very outset that the jurisdiction conferred on this court in dealing with a reference application under Section 256(1) or (2) of the Act is a very limited one, and before the same can be invoked or exercised, it must involve a question of law. The finding of fact recorded by the Tribunal has to be taken as conclusive, unless the same is unsupported by evidence, or is unreasonable and perverse in nature. Therefore, though the finding, whether or not the assessee had concealed the particulars of his income is purely a question of fact, but if there is no evidence to support it, or if it is perverse, then it is open to attack as erroneous in law. An Explanation to Section 271 was inserted by the Finance Act, 1964, with effect from April 1, 1964, to the following effect: "Explanation.--Where the total income returned by any person is less than 80 per cent. of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under Section 143 or Section 144, or Section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income, but which has been disallowed as a reduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of Clause (c) of this Sub-section." ;