Madhya Pradesh H.C : Whether, on the facts and in the circumstances of the case, Tribunal was justified in holding that no penalty under s. 271(1)(c) can be levied in the case of the income assessed on negative figure even though Expln. 4 to s. 271(1) provided for levy of penalty in such cases ?

High Court Of Madhya Pradesh : Indore Bench

CIT vs. Chirag Ingots (P) Ltd.

Section 256(2), 271(1)(c)

Asst. Year 1991-92

A.M. Sapre & Ashok Kumar Tiwari, JJ.

IT Ref. No. 68 of 1999

4th October, 2004

Counsel Appeared :

R.L. Jain, for the Applicant

ORDER

A.M. Sapre, J. :

This is an application made by Revenue (CIT) under s. 256(2) of the IT Act consequent upon the rejection of their application made under s. 256(1) of the Act by the Tribunal vide order dt. 16th Nov., 1998, passed in RA No. 148/Ind/1998, arising out of the order, dt. 25th June, 1998, passed by Tribunal in ITA No. 545/Ind/1994 in respect of asst. yr. 1991-92. The applicant i.e., Revenue had sought following three questions of law for being referred to this Court by the Tribunal under s. 256(1) of the Act. However, the Tribunal declined to refer the questions holding that the questions proposed are essentially questions of fact and hence, they cannot be said to arise out of the order passed by the Tribunal in appeal.

2. Following were the questions proposed to Tribunal for being referred and the same are again being proposed in this application made under s. 256(2) ibid :

“1. Whether, on the facts and in the circumstances of the case, Tribunal was justified in holding that even after filing of revised return by the ‘A’ offering a sum of Rs. 7,50,000 as income from other sources on account of unproved cash credits, the Revenue was required to bring material on record during penalty proceedings to show that the cash credits were not genuine and that Supreme Court judgment in the case of G.C. Agrawal vs. CIT (1991) 95 CTR (SC) 257 : (1990) 186 ITR 571 (SC) and Madras High Court in the case of H.V. Venugopal Chettiar vs. CIT (1985) 153 ITR 376 (Mad) do not render any assistance to the Revenue ?

Whether, on the facts and in the circumstances of the case, Tribunal was justified in holding that no penalty under s. 271(1)(c) can be levied in the case of the income assessed on negative figure even though Expln. 4 to s. 271(1) provided for levy of penalty in such cases ?

Whether, on the facts and in the circumstances of the case, Tribunal was justified in holding that the decision of M.P. High Court in the case of CIT vs. Saora Sugar Mills is applicable to the facts of the case even though Expln. 4 to s. 271(1) has been brought on the statute w.e.f. 1st April, 1976 ?”

Heard Shri R.L. Jain, learned counsel for the applicant. Having heard learned counsel for the parties and having perused record of the case, we too are of the view that the questions proposed are essentially questions of fact and cannot be termed as questions of law for being referred to this Court for answer. In other words, none of the questions proposed can be said to have arisen out of the order passed by the Tribunal in appeal nor can they be said to be questions of law. The Tribunal was, therefore, justified in rejecting the application made under s. 256(1) ibid by the Revenue.

The dispute arises out of asst. yr. 1991-92. It relates to imposition of penalty on the assessee under s. 271(1)(c) of the Act. It was set aside by CIT(A) as also by Tribunal holding that in the absence of any factual finding that the loans taken by the assessee were bogus, no penalty can be imposed. In other words, the appellate authorities i.e., CIT(A) and Tribunal were of the view that in order to impose penalty, there must be a categorical finding of fact that transaction of loan relied on by assessee was a bogus transaction. It is only then the question of imposition of penalty may arise. We concur with the view so taken, as in our opinion, it does not call for any interference. In fact, the view so taken is based on questions of fact and cannot be faulted with.

6. In view of aforesaid discussion, we are not able to find any case much less question of law arising out of the Tribunal’s order. The application is thus, liable to be dismissed. It is accordingly, dismissed.

[Citation : 275 ITR 310]

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