Judgment:
N.V. Balasubramanian J.
1. This is an application by the assessee under section 256(2) of the Income-tax Act, 1961, to direct the Appellate Tribunal to state a case and refer the following questions for the opinion of this court :
'1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the levy of penalty in respect of the sale consideration of the sale of land is justified
2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the sale consideration is not Rs. 8,16,550 as disclosed in the deed of sale but is a sum of Rs. 16,43,539 as estimated by the Assessing Officer
3. Whether the Tribunal is right in law in holding that the extra consideration alleged to have been received by the managing director, should also be attributed to the applicant company
4. Whether the Tribunal is right in law in holding that the extra consideration alleged to have been received by the managing director of the applicant company is also applicable for the purpose of levy of penalty under section 271(1)(c) of the Income-tax Act
5. Whether the Tribunal is right in holding that the applicant company has concealed the particulars of the real consideration in respect of the sale of the land and consequently, the income is liable for penalty ?'
2. It is a case of levy of penalty and the facts leading to the addition to the capital gains as disclosed by the assessee are fully set out in the judgment rendered by us in T.C.P. No. 139 of 1996 of even date. Since the facts are fully set out there, it is unnecessary to burden the judgment with the factual details. However, it is necessary to state that the Income-tax Officer on the basis of the addition made in the assessment order initiated penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), against the assessee and after considering the explanation given by the assessee, he held that the real price for which the transaction has been gone through is Rs. 4.2 lakhs per ground as against Rs. 2.10 lakhs stated in the document of sale. He, therefore, came to the conclusion that the assessee has deliberately concealed the true particulars of income. In so far as the contention that vicarious liability is not attracted in the hands of the company for the extra income received, the Income-tax Officer found that the whole transaction was put through the managing director and the company was acting only through the people working in the company. Therefore, he came to the conclusion that the statements recorded from the eye witnesses clearly show that the assessee was guilty of concealment of particulars of income. He, therefore, levied minimum penalty under section 271(1)(c) of the Act of Rs. 6,12,135 after getting approval of the Deputy Commissioner, Central Range-I, Madras.
3. The assessee preferred an appeal against the order levying the penalty to the Commissioner of Income-tax (Appeals) and the Commissioner (Appeals) found that the issue relating to the levy of penalty was fully examined and the charge of penalty was proved. As regards the contention that the assessee had not received the money, the Commissioner (Appeals) found that there is no proof to show that the managing director pocketed the proceeds of the transaction and the said P. Govindasami acted in the capacity of managing director and the company was liable for penalty. The Appellate Tribunal, on appeal by the assessee, upheld the addition by stating that the actual sale price was Rs. 4.20 lakhs per ground and not Rs. 2.10 lakhs as stated by the assessee. The Appellate Tribunal also found that the sale of plot was effected by the managing director and he was authorised to dispose of the plot of land, and the sale consideration was received by the managing director of the assessee-company and if any part of the amount was not paid by the managing director of the company, it is for the assessee-company and its managing director to decide. The Appellate Tribunal, therefore, held that the assessee has to account for the total consideration of the sale of the plot in question. In conformity with the finding of the Appellate Tribunal in the quantum of appeal, the order of the Commissioner (Appeals), upholding the levy of penalty was upheld.
4. The assessee filed a petition under section 256(1) of the Act before the Appellate Tribunal to state a case and refer the questions set out in paragraph 1 above. The Appellate Tribunal, however, rejected the reference application on the ground that the questions sought for are questions of fact which led the assessee to file the present application under section 256(2) of the Act to direct the Appellate Tribunal to state a case and refer the said questions.
5. Mr. V. Ramachandran, learned senior counsel appearing for the assessee, submitted that the approach of the Appellate Tribunal was erroneous in sustaining the penalty. According to learned senior counsel, the Appellate Tribunal proceeded on the basis that the penalty is automatic and once addition was upheld in the quantum appeal, the penalty should follow. According to learned senior counsel, whatever might be the case with reference to the addition as regards capital gain in so far as the penalty is concerned there must be some independent evidence to show that the assessee has actually received the money and there was concealment of income in the return filed by the assessee. Hence, according to learned senior counsel, since the Department has not established the concealment on the part of the assessee, the penalty on the basis of the addition made in the assessment order which was upheld by the Appellate Tribunal cannot be levied. Therefore, he has submitted that the entire approach made by the Appellate Tribunal was erroneous and since the Appellate Tribunal has not considered the question in the proper perspective the questions set out in paragraph 1 above may, therefore, be referred.
6. Mr. S. V. Subramanian, learned senior counsel appearing for the Department, on the other hand, submitted that the Appellate Tribunal has gone into the question and found on the basis of the materials that the addition was justified and the Department has established that the assessee has received much more than what was actually disclosed in the document of sale and hence, the penalty proceedings were validly initiated and penalty was rightly imposed. According to him, the finding with reference to penalty is a finding of fact and no interference is called for with reference to the finding of the Appellate Tribunal.
7. We have considered the rival contentions urged on behalf of the assessee and on behalf of the Department. The Appellate Tribunal found that on the basis of the seized materials as well as the statement of the purchaser and persons connected with the transaction of sale, the actual sale consideration was Rs. 16,43,539 and not Rs. 8,16,550 as declared by the assessee. The Appellate Tribunal also found that the receipt of the additional consideration was proved by the Department and the Appellate Tribunal also found that it was not able to accept the contention of the assessee that it did not receive any additional consideration. The Appellate Tribunal found that the managing director executed the sale deed on behalf of the assessee and received the additional consideration on behalf of the assessee and the assessee-company had the knowledge of the additional consideration. In spite of its specific knowledge, the assessee had not disclosed the true consideration for sale in the return of income filed by the assessee when declaring the capital gains. The Appellate Tribunal, therefore, upheld the levy of penalty. The findings of the Appellate Tribunal that there was additional consideration over and above the amount disclosed in the document of sale and the assessee had actually received the extra consideration are all findings on fact and the findings of the Appellate Tribunal, are based on the materials on record. The logical conclusion that the Appellate Tribunal has drawn from the factum of proof of receipt of the additional consideration is that the assessee had concealed the particulars of income in the return of income filed when declaring the capital gains in the said return. Therefore, the said findings of the Appellate Tribunal are all findings of fact. The Supreme Court in the case of CIT v. Ashoka Marketing Ltd. : [1976]103ITR543(SC) , held that the question whether the assessee had concealed his income is a question to be decided on the facts of the case and that the finding with reference to the concealment of income is a finding of fact. In the instant case, the Appellate Tribunal has arrived at the finding of concealment of income on the basis of the materials on record and, therefore, we are of the opinion that no question of law arises out of the order of the Appellate Tribunal. The view of the Appellate Tribunal that there was concealment of income on the facts of the case, is justified, and, therefore, we reject the tax case petition. No costs.