1. The Income-tax Appellate Tribunal at the instance of this court on an application filed under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), referred the following question of law for the assessment year 1977-78 :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling the penalty of Rs. 15,218 imposed under Section 271(1)(c) of the Income-tax Act, 1961 ?'
2. As to what are the facts in the case we may refer a portion of paragraph 2 of the case sent by the Tribunal.
'The assessee is a partnership firm. The assessment year involved is 1977-78. As against the loss of Rs. 12,790 returned the assessment was completed on a total income of Rs. 52,270. The difference between the returned figure and the income assessed arose because : (i) the assessee had claimed expenses of Rs. 40,793 on repairs and maintenance as revenue expenses which were disallowed by the Income-tax Officer treating them as capital expenses, (ii) the assessee claimed an expenditure of Rs. 10,000 as allowable during the year under consideration. The Income-tax Officer disallowed the same on the ground that the expense of Rs. 10,000 did not relate to the year under consideration. As the returned figure was less than 80 per cent. of the assessed figure, the Income-tax Officer started penalty proceeding under Section 271(1)(c) of the Income-tax Act, 1961, and asked the assessee to explain as to why it should not be penalised. The assessee replied that the aforesaid difference arose merely because of difference of opinion between the assessee and the Income-tax Officer and
so it should not be considered as a result of any concealment of income on the part of the assessee. ...'
3. The defence of the assessee did not find favour with the Income-tax Officer who imposed penalty of Rs. 15,218 under Section 271(1)(c) of the Act. The assessee filed an appeal before the Appellate Assistant Commissioner of Income-tax, who held that the penalty was not justified. A further appeal was taken by the Revenue before the Tribunal against the same. The Tribunal recorded a finding that there was no concealment of any income by the assessee and after examining the whole aspect of the matter held that the question of law did not arise.
4. Mr. Sharan relying on a Full Bench decision of this court in CIT v. Nathulal Agarwala and Sons : [1985]153ITR292(Patna) submitted that presumption had to be raised against the assessee that he concealed his income and as such he was, therefore, liable to penalty as was rightly imposed by the Income-tax Officer. We are unable to accept the aforesaid submission. Even if the presumption is raised against the assessee, but then that presumption had been rebutted by the assessee and the Tribunal after taking ,note of all the facts came to a conclusion that there was no concealment of income. The aforesaid principle advanced by the Revenue cannot be made applicable to the case of the assessee. In this view of the matter, we answer the question in the affirmative in favour of the assessee and against the Revenue.
5. Since the assessee is not pursuing the matter there shall be no order as to costs.