Rajendra Nath Mittal, J.
1. This petition has been filed under section 256(2) of the I.T. Act, 1961 (hereinafter referred to as the Act), praying that the Tribunal be directed to refer the following question for the opinion of this court:
' Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that penalty under section 271(1)(c) read with the Explanation is not exigible '
2. Briefly, the facts are that the assessee is a registered firm and carried on business of fabrication of staple cloth, purchase and sale of yarn and ready made cloth. During the accounting year ending March 31, 1968, relevant to the assessment year 1968-69, which is the second year of the assessee's business, the assessee filed two returns--one on August 9, 1968, declaring an income of Rs. 30,856 and the second on October 29, 1968, declaring an income of Rs. 31,211. The ITO noticed a cash credit of Rs. 20,000 in the name of Tarsem Lal in the books of the assessee on which no interest had been paid. The assessee made a statement that the amount had been brought by Tarsem Lal from Gian Chand who was a well to do person, but this explanation was not accepted by the ITO. Consequently, the amount was added to the assessee's income from undisclosed sources, vide his order of June 27, 1969.
3. The assessee went up in appeal before the AAC, but it was dismissed on September 24, 1970. It went up in second appeal before the Appellate Tribunal which also met with the same fate on March 3, 1973. At the time of completing the assessment, penalty proceedings under section 271(1)(c) of the Act were initiated by the ITO. As the minimum penalty imposable in the case exceeded Rs. 1,000, the matter was referred by the ITO to the IAC.
4. The IAC, in the course of penalty proceedings, examined Tarsem Lal, Gian Chand, Gauri Shankar, father of Tarsem Lal, Pushpawati, wife of Gian Chand, Gujjar Mal, father-in-law of Gian Chand, and Jagdish Chander, a partner of the firm. After taking into consideration the evidence, he imposed a penalty of Rs. 20,000, vide order dated August 5, 1971.
5. The assessee filed an appeal before the Appellate Tribunal against the order of the IAC. A difference arose between the Accountant Memberand the Judicial Member of the Tribunal. On account of the difference of opinion, the matter was referred to the Vice-President, who agreeing with the Accountant Member, held that no penalty was leviable in the circumstances of the case. The Tribunal, therefore, accepted the appeal. The Commissioner moved an application under section 256(1) of the Act for referring the . aforesaid question for the opinion of this court. The request of the Commissioner was declined by the Tribunal, vide order dated August 5, 1974. He has now come up in this petition under section 256(2) of the Act to this court.
6. It is contended by Mr. Awasthy, learned counsel for the petitioner, that the approach of the Accountant Member as well as the Vice-president in deciding the matter was not based on correct principles. He has vehemently argued that while deciding the question as to whether the assessee was liable to pay penalty under section 271(1)(c) of the Act, the Accountant Member and the Vice-President misinterpreted the Explanation to Section 271(1)(c). According to the counsel, if the Explanation was not taken into consideration in the right perspective, the question of fact decided on that basis will be a question of law by itself. To fortify his arguments he made reference to CIT v. Bharat Tubewell Stores , AddL CIT v. Swastik Mineral Corporation : 118ITR583(SC) , Jawahar Woollen Textile Mills v. CIT and AddL CIT v. Chandravilas Hotel : 115ITR118(SC) . On the other hand, it is vehemently contended by the learned counsel for the respondent that the Tribunal gave a firm finding that no question of law arose as the question whether there had been a concealment of income or not was a question of fact. He also read exhaustively the order of the Tribunal to support his contention.
7. We have heard the learned counsel for the parties at considerable length but regret our inability to accept the contention of the learned counsel for the petitioner. In the first instance, it is to be pointed out that the nature of the question suggested by the petitioner shows that the petitioner did not seek to challenge the finding of fact arrived at by the Accountant Member and the Vice-President on the ground that it is vitiated as wrong principles of law have been applied for arriving at it. The Accountant Member, while deciding the case, came to the conclusion that there is no cogent material or evidence on the record from which it can be inferred that the assessee has consciously concealed the particulars of income or had deliberately furnished in accurate particulars in respect of the same. He, after taking into consideration the Explanation, further held that in the final analysis all that had been done was that the assessee's explanation had been rejected and thereby the amount of Rs. 20,000 had been treated as the assessee's income from undisclosed sources. He also held that by producing Tarsem Lal, Gian Chand, etc., the assessee had displaced the presumption that he was not guilty of any fraud or gross 'or wilful neglect. These findings are essentially findings of fact and the petitioner cannot be allowed to challenge the findings unless he sought to challenge those findings by seeking a reference to this court. The petitioner, however, did not do so.
8. It is settled law that the conclusions drawn by the Appellate Tribunal are all findings of fact and on such findings no question of law arises for reference. It is also settled that a case for imposition of penalty has to be found on the facts found by the Tribunal. For the aforesaid view, I get strength from the observations of this court in Basant Lal Om Parkash v. CIT , wherein it was held that a case for imposition of penalty has to be found on the material on record and it is essentially a question of fact whether in a certain case penalty is called for or not. Similar view was taken by a Division Bench of the Rajasthan High Court in AMI, CIT v. Gem Palace . It was held by the learned Bench that the question whether there was any concealment of income and whether there was any fraud or gross or wilful neglect in the filing of a proper return of its income on the part of the assessee was essentially a question of fact. It may be emphasized that the Accountant Member as well as the Vice-President did take into consideration the Explanation and thereafter held that the assessee displaced the presumption that it was not guilty of any fraud or gross or wilful neglect.
9. The cases referred to by Mr. Awasthy are distinguishable. In Bharat Tubewell Stores' case , the Appellate Tribunal had set aside the penalty on the ground that the burden lay on the revenue to establish the charge of concealment and that the falsity of an explanation by the assessee cannot be construed as establishment of concealment. In the present case, there are no such observations in the majority judgment. On the other hand, the Accountant Member and the Vice-President came to the conclusion that the assessee had been able to discharge the burden placed on it by the Explanation given under section 271(1)(c). In Swastik Mineral Corporation's case : 118ITR583(SC) , the Tribunal set aside the order of penalty passed against the assessee and in doing so did not take into consideration the Explanation given in Section 271(1)(c). In spite of this, the Supreme Court did not direct the Tribunal to refer the question to the High Court. This case rather helps the assessee to some extent. The facts in Jawahar Woollen Textile Mills' case were different. There a creditor had made a statement that he was not carrying on business of money-lending, but was merely lending his name as a creditor on payment of 3 per cent, commission. The ITO came to the conclusion that the amount shown as advance from the creditor in the books of the assessee was a bogus entry. Consequently, a penalty was imposed on the assessee. The order was upheld by the Tribunal. The facts of the case are distinguishable from, those of the present case and, therefore, the ratio therein will not apply to it. In Chandravilas Hotel's case : 115ITR118(SC) , the question referred to was whether, on the facts and in the circumstances of the case, the finding of the Tribunal that the assessee was not guilty of any fraud or gross or wilful neglect in returning the income at a figure less than 80 per cent, of the income assessed was arrived at without considering the entire material on record. The wording of the question itself shows that the department had challenged the finding of fact arrived at by the Tribunal. In the present case, as already adverted to above, the question sought to be referred by the department is different. In these circumstances, Mr. Awasthy cannot derive any benefit from the aforesaid cases. Consequently, there is no merit in the petition.
10. For the reasons recorded above, the petition fails and the same is dismissed with no order as to costs.
J.V. Gupta, J.
11. I agree.