SHIVRAJ V.PATIL, J. - (1.) HEARD the learned counsel for the parties.
(2.) THIS is an application under s. 256(2) of the IT Act, 1961 (for short 'the Act' hereinafter), at the instance of the Revenue for calling statement of case from the Tribunal on the following questions : (1) Whether, on the facts and in the circumstances of the case, the order of Tribunal cancelling minimum penalty levied under s. 271(1)(c) for concealment of income based on addition of Rs. 1 lakh in the total income sustained by the Tribunal itself worked out on the basis of suppressed sale of liquor as noticed during search under s. 132 of IT Act, 1961, was not perverse. (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalty levied under s. 271(1)(c) for concealment of income ? or (3) in the alternatively -Whether on the facts and in the circumstances of the case the Tribunal was not required to sustain the penalty levied under s. 271(1)(c) for furnishing inaccurate particulars of income in case it was not satisfied that assessee had not concealed any particulars of its income and to refer those questions for decision. The respondent firm is an assessee dealing in liquor in U.P. On 23rd March, 1985, when the authorised officer seized the cash found at Rs. 5,23,125 and certain documents for the asst. yr. 1985 -86, the assessee had filed return of income on 12th Sept., 1985, declaring income of Rs. 4,62,770 on the total sales of Rs. 3,17,12,712 which gave a gross profit @ about 5.9%. During the course of assessment proceedings the ITO, A Ward, Churu on scrutinising the books of accounts found that the sales were not vouched and certain expenses incurred were not supported by vouchers. He concluded under s. 145(1) of the Act that the sale price of liquor in respect of the shops other than the shop at Lohamandi was much lesser as compared to the sale price of liquor at Lohamandi shop. He estimated sales at Rs. 20 lakhs and the same were added to the trading account. This addition raised the gross profit rate to 11 per cent, thus making addition of Rs. 20 lakhs and disallowing some expenses the ITO completed the assessment on 27th March, 1986, on an income -of Rs. 24,96,770. The assessee went in appeal before the CIT(A). The CIT(A) in the other dt. 25th March, 1987, concluded that the accounts of the assessee were not reliable and confirmed the suppression of sales to the tune of Rs. 20 lakhs. The assessee took the matter further in appeal before the Tribunal. The Tribunal vide order dt. 27th June, 1988, in ITA No. 405/Jp/87 sustained addition of Rs. 1 lakh only. But in the meantime the IAC levied penalty of Rs. 18,56,186 under s. 271(1)(c) of the Act for concealment of income on the basis of addition of Rs. 20 lakhs. The assessee filed appeal against this order under s. 271(1)(c) before the CIT(A). The CIT(A) by order dt. 20th Dec., 1988, reduced the quantum of penalty in proportion to addition of Rs. 20 lakhs reduced to Rs. 1 lakh. While deciding the appeal the CIT(A) observed that the Tribunal sustained addition of Rs. 1 lakh mainly on the consideration that sale price charged at Lohamandi Shop was higher than the price charged at other shops and Lohamandi shop functioned only by 18 days during the year. Aggrieved by the order of the CIT(A) sustaining the minimum penalty the assessee filed an appeal before the Tribunal which by order dt. 8th March, 1991, in ITA No. 259/Jp/89 cancelled the penalty sustained by the CIT(A) on the ground that addition of Rs. 1 lakh was made on estimate basis and assessee's explanation was bona fide. Under these circumstances the present application is made by the Revenue as already stated above. The learned counsel for the Department urged that the fact that Tribunal sustained addition of Rs. 1 lakh was sufficient enough for sustaining the penalty under s. 271(1)(c) of the Act taking it as concealment of income. Per contra, the learned counsel for the respondent assessee urged in support and justification of the order of the Tribunal. He contended that addition of Rs. 1 lakh sustained by the Tribunal is not on the ground that there was concealment of income. On the other hand, it was only on the basis of estimation and best judgment assessment. The learned counsel further added that the Tribunal on consideration of the material available before it on facts concluded that the explanation given by the assessee was bona fide and addition of Rs. 1 lakh was only justified. The Tribunal did not record a finding that there was concealment of income by the respondent -assessee. The learned counsel, in support of his submission relied on the decision of the apex Court in the case of CIT vs. Ashoka Marketing Ltd. : [1976]103ITR543(SC) : and in particular drew our attention to para 5 to contend whether or not the assessee has concealed its income is a question to be decided on the facts of a case, and where the decision that the income was not concealed was recorded by the Tribunal, no question of law arises for consideration. He cited the case of Add]. CIT vs. Noor Mohd. and Co. and Ors. in support of his contention that the question to be considered in this case is not a question of law. It is a mixed question of law and facts and the Tribunal on facts concluded in favour of the assessee and added Rs. 1 lac to the income and did not accept the case of the Revenue that it was a concealment. Based on the same judgment he further urged that the finding on question of fact is open to be attacked as erroneous is law only when there is no evidence to support it and it is not so in the case in hand. Yet, he cited other decision of High Court of Madhya Pradesh in the case of CIT vs. Pursuhotarndas and Ors. (1998) 149 CTR (MP) 151: (1998) 145 Taxation 145 (MP) to take support that when the Tribunal in its discretion has passed the order and added only Rs. 1 lakh to the income and cancelled the penalty imposed, it is not open for the Revenue for questioning it under s. 256(2) and asking for reference.
(3.) WE have considered the submissions of the learned counsel for the parties. Having regard to the admitted facts and the finding of fact as recorded by the Tribunal, there is nothing before us to show that there was concealment of income so as to attract penalty and the Tribunal in its discretion has only added Rs. 1 lakh on the basis of estimation and exercised its discretion. Under the circumstances the finding recorded is purely on question of fact and no question of law arises for consideration. Hence, we do not find any merit in the application for reference. Accordingly, the reference application is rejected.;