R. M. Sahai, J. - Under section 256(2) of the Income-tax Act, the Income-tax Appellate Tribunal Delhi, Bench C has submitted this statement of the case with the following question of law for the opinion of this Court :-
'Whether on the facts and in the circumstances of the case the Tribunal was legally correct in deleting the penalty levied under section 271(1)(c) of the Income-tax Act, 1961 ?'
2. The assessment year in question is 1965-66. The assessee, a registered firm, undertook forest contracts in the year in dispute. If filed a return showing loss of Rs. 25,997/-. The I.T.O. determined the total income at Rs. 53,875/-. The Appellate Asstt. Commissioner of Income tax reduced the total income by Rs. 1,500/-. The main addition sustained was on account of estimate of profit from contract business at Rs. 53,125/-. The Tribunal, however, further reduced the total income by Rs. 18,125/-. In the meantime the case was referred to the Inspecting Assistant Commissioner of Income tax for levy of penalty. A sum of Rs. 7,000/- was levied at penalty by reference to the difference between the income returned and the income as determined after giving effect to the order of the Appellate Assistant Commissioner. The assessees appeal was allowed regarding the penalty matter by the Tribunal and it recorded the following findings :-
'The addition has been made by estimating the trading results by reference to certain defects in the accounts. The defects were not such as could be attributed to gross or wilful neglect or fraud. Moreover, the addition was essentially an estimate subject to the usual margin of error.'
Counsel for the Department has urged that this finding recorded by the Tribunal was incorrect and was based on a wrong approach of law as the Explanation to Section 271(1)(c) provides that the burden to establish that there was no fraud or wilful neglect was on the assessee. He has further argued that the finding is based on no material. So far the question whether there was any material for the finding recorded by the Tribunal is concerned, it may be pointed out that no such question has been referred to us. It is well settled that the answer to a question in advisory jurisdiction has to be given on facts and circumstances found by the Tribunal and not as it may be found by the High Court. We are precluded from appreciating the facts ourselves.
3. Mr. A. N. Mahajan appearing for the assessee has brought to our notice two decisions reported in Additional Comm. of Income-tax, Lucknow vs. M/s. Horilal Kunj Behari Lal, Hardoi (1975 U.P.T.C. 364 : 1975 C.T.R. (All.) 197 and Commissioner of Income Tax, U.P. vs. Harnam Singh and Co. Sharanpur (1972 U.P.T.C. 669). We agree with the principle laid down in these two decisions.
4. In view of what we have stated above we answer he question in the affirmative in favour of the assessee and against the Department. The assessee is entitled to costs which we assess at Rs. 200/-.