Allahabad H.C : Whether in law and facts, the Tribunal was justified in cancelling the penalty imposed under s. 271(1)(c) of the IT Act.

R. M. SAHAI, J.:

This is an application under s. 256(2) of the IT Act filed by the CIT on behalf of the Revenue. The only question raised is whether in law and facts, the Tribunal was justified in cancelling the penalty imposed under s. 271(1)(c) of the IT Act. Although learned counsel for the Department has vehemently argued that the Tribunal was not justified in setting aside the order passed by the ITO, he has failed to satisfy us that the finding recorded by the Tribunal suffers from any error of law. The only reason for imposing the penalty was that the income of some of the minors, who were admitted to the benefits of the partnership, were not included in the return.

The Tribunal endorsed the finding of the AAC that it was the common belief at the relevant time that the income earned by the minors prior to 1st Oct., 1975, was not to be included in the total income by invoking the provisions of s. 64(1)(iii) and acting under this belief, this explanation of the assessee was accepted. It was further found that since the income of the minors was being assessed separately, there could be no intention on the part of the assessee to conceal the income. In view of these findings, the question of law raised by the Department does not arise.

The application consequently fails and is rejected.

[Citation : 171 ITR 611]