JUDGMENT
G.C. Bharuka, J.
1. In this case the following question of law has been referred by the Tribunal pursuant to the order of this Court passed under Section 256 (2) of the Income Tax Act, 1961, for the opinion of this Court:
Whether on the facts and in the circumstances of the case, the Tribunal was justified in canceling the penalty imposed under Section 271(1)(c) of the Income-tax Act, 1961 read with the Explanation.
2. The short facts giving rise to the present case may be traced out from the statement of case. Penalty proceeding was initiated against the assessed because according to the order of assessment the returned income was found less than 80% of the assessed income. The income was assessed at a higher figure because the assessed had failed to satisfactorily explain the source of deposit of Rs. 1,25,000 appearing in its books of accounts. The I.T.O. had also found that the assessed had made wrong claim of deduction in respect of certain expenses. In this view of the matter the inspecting Assistant Commissioner imposed a penalty of Rs. 50,000 for concealment of income.
3. On appeal to the Tribunal, the Tribunal on consideration of the entire facts and the materials on record allowed the appeal by canceling the penalty order. I may better quote the findings of the Tribunal, which runs as under:
In our opinion, falsity of explanation no doubt is a good evidence for assessment but is not a conclusive evidence for levy of penalty. There is no material on record to show that the I.A.C. disproved the explanation of the assessee though it may be held to be unproved for the assessment proceedings. The explanation given by the assessee may not be accepted as satisfactory for the purpose of assessment but those circumstances do not lead to the reasonable and positive inference that assessee’s case is false. We see that all the depositors appeared before the Income-tax Officer and stated to have made deposits with reference to their sources of income and that, they were not related to the assessee. We were told that subsequently payment of interest on the deposits was made by cheque. Therefore, it can be legitimately presumed that the assessee has proved beyond doubt its case and has avoided the fiction created by “Explanation” to Section 271(1)(c). The nature of defects pointed out by the Income Tax Officer in the books of account for making trading addition and disallowances out of certain expenses could not by itself lead to the inference that the assessce committed fraud or gross or willful neglect. Having regard to the totality of circumstances and in view of the observations that we have made above, we hold that this was not a case of concealment and no penalty could be imposed under Section 271(1)(c) of the Act. We, therefore, cancel the penalty.
This is clearly a finding of the Tribunal.
4. Recently, the Supreme Court in the case of C.I.T. v. Mussadilal Ram Bharose , has examined the question involved in the present case and has held that,
The position, therefore, in law is clear. If the returned income is less than 80% of the assessed income, the presumption is raised against the assessee that the assessee is guilty of fraud or gross or willful neglect as a result of which he has concealed the income but this presumption can be rebutted. The rebuttal must be on materials relevant and cornet. It is for the fact-finding body to judge the relevancy and sufficiency of the materials. If such a fact finding body, bearing the aforesaid principles in mind, comes to the conclusion that the assessee has discharged the onus, it becomes a conclusion of fact. No question of law arises. In this case the Tribunal has borne in mind the relevant principles of law and has also judged the facts on record. It is not a case that there was no evidence or there was such evidence on which no reasonable man could have accepted the explanation of the assesses. In that view of the matter, in our opinion, the Tribunal rightly rejected the claim for reference under Section 256(1) and the High Court correctly did not entertain the application for reference under Section 256(2) of the Act.
5. In the present case as well, the departmental representative could not show or even urged that the finding of fact arrived at by the Tribunal was in any way perverse or can be said to have vitiated for non-consideration of the relevant materials or has been arrived at by taxing into account irrelevant materials.
6. In this view of the matter, the finding of the Tribunal is clearly a finding of fact and no question of law arise out of the impugned order of the Tribunal for a reference under the provisions of Section 256 of the Income tax Act, 1961. In my view, the reference itself is incompetent and, accordingly, rejected, in the circumstances of the case there shall be no order as to costs.
7. Let a copy of this judgment be transmitted to the Assistant Registrar, Income-tax Appellate Tribunal, Patna Bench, and Patna, in terms of Section 260 of the Income Tax Act, 1961.