S. P. Goyal, J. - The assessee is a registered firm and derives its income from the purchase and sale of hosiery goods and their export. Under the entitlement against exports, the assessee imported 33,157 lbs. of wool tops out of which 12,322 lbs. were stated to have been sold to Asha Wool Trading Co. at the rate of Rs. 6.80 per lb. Asha Wool Trading Co. sold the same goods to British India Corporation at the rate of Rs. 13.70 per lb. The transaction with Asha Wool Trading Co. was found to be a sham transaction and at the level of the appeal before the Tribunal, an amount of Rs. 1,00,000 was added to the declared income of the assessee.
2. In the penalty proceedings u/s 271(1)(c), IT Act, the IAC imposed a penalty of Rs. 88,022 which was, however, reduced by the Tribunal to Rs. 25,000 vide order dt. 15-12-1975. Still dissatisfied the assessee moved an application for referring six questions of law arising out of the said order of the Tribunal. The arguments before us, however, were confined only to two of them which read as under :
(1) Whether, on the facts and circumstances of the case, the Tribunal having found that there was no evidence on record to suggest that after receiving the sale proceeds at the rate of Rs. 13.70 per lb. from British India Corporation, Kanpur, a part of money was definitely passed on to the assessee, there was any justification in law to apply the Explanation to s. 271(1)(c) of the IT Act, 1961 ?
(2) Whether, on the facts and circumstances of the case, on the findings given in question No. (1) the onus had not been shifted on the department to prove that there was deliberate concealment furnishing inaccurate particulars of income ?
The Tribunal dismissed the application with the observation that the question before it was as to whether on the material on record any penalty was exigible and the finding recorded thereon being a pure finding of fact no question of law arises for reference. So, the assessee moved the present application u/s 256(2) of the IT Act, for a mandamus directing the Tribunal to refer the above mentioned two questions to this Court. The Tribunal in the order dt. 15-12-1975, recorded a clear finding that so far as the transactions with Asha Wool Trading Co. were concerned, they were not satisfied that the onus that lay on the assessee that it was not guilty of any fraud or wilful neglect in actually showing the income earned through that party had been discharged. However, while reducing the penalty it was observed that there was no evidence on the record to suggest that after receiving the sale proceeds at the rate of Rs. 13.70 per lb. a part of the money was definitely passed on to the assessee. According to the ld.counsel whether the onus imposed by Explanation to s. 271(1)(c) of the IT Act stood discharged or not was a question of law arising out of the order of the Tribunal. We are unable to agree with this contention. The finding relied upon by the ld. counsel is in the nature of a passing observation made to reduce the amount of the penalty. As regards the discharge of the onus by the assessee the Tribunal in the earlier part of the judgment after considering all the facts and circumstances recorded a clear finding that the assessee had failed to prove the genuineness of the firm Asha Wool Trading Co. and the sale made to it. It was on this finding that the imposition of the penalty entirely depended and the same being a pure finding of fact, we find no reason to differ with the Tribunal that no question of law arises from the order imposing the penalty which could be referred to this Court for opinion. This petition is accordingly dismissed.
Prem Chand, J. - I agree.