T. V. R. Tatachari, C.J. - This is an application by the Commissioner of Income-tax, Delhi-IV, New Delhi, under Section 256(1) of the Income-tax Act, 1961, praying that the Income-tax appellate Tribunal, Delhi Bench B, be required to state the case and refer the following question stated to arise out of the order of the said Tribunal assessment year 1966-67 :
'Whether on the facts and in the circumstances of the case, the Tribunal was legally right in concluding that the provision of Section 271(1)(c) are not attracted in the case of the assessed and thus holding that no penalty is livable under section 271(1)(c) of the Income-tax Act, 1961?'
2. The assessed is M/s. Sarof Industries. For the assessment year 1966-67, the assessed filed its return originally on 31st December, 1966, declaring an income of Rs. 66,000/- and the said amount was subsequently revised to Rs. 72,000/- and its assessment was completed on a total income of Rs. 1,03,674/-. The difference between the returned income and the assessed income was on account of certain disallowance, and an addition of Rs. 10,000/- in the trading account (agreed to by the assessed), assessment also two other amounts of Rs. 7,321/- and Rs. 6,000/- representing bogus interest claimed in certain names and two cash credits of Rs. 5,000/- and Rs. 1,000/-each in the names of Shri Ram Gopal Sarogi and Shri Baij Nath Dalal respectively. The said two cash credits were surrendered by the assessed. As the Income-Tax Officer was of the view that there was definite concealment relating to the aforesaid two items of Rs. 7,321/- and Rs. 6,000/-and also because the difference between the returned income and the assessed income was more than 20%, he initiated penalty proceedings and referred the matter to the Inspecting Assistant Commissioner under section 274(2) of the Act.
3. The Inspecting Assistant Commissioner issued a show cause notice. The assessed filed a reply showing cause. The Inspecting Assistant Commissioner was not satisfied with the Explanationns given by the assessed, and he held that the assessed had concealed the particulars of the said income. In that view, he imposed a penalty of Rs. 8,000/-.
4. On appeal by the assessed, the Income-tax appellate Tribunal, by the impugned order, dated 20th November, 1974, held (1) that the assessed had claimed interest on the basis of the fact that similar claim by him had been allowed for the past 15 to 20 years and he was not at all in doubt about the same, and the I.T.O. had suddenly changed the position and disallowed the assesseds claim, and (2) that so far at the cash credits amounting to Rs. 6,000/- in respect of Shri Ram Gopal Sarogi and Baij Nath Dalal were concerned, it was on record that the assessed surrendered the cash credits with a view to purchase peace and the finding was not controverter. The Tribunal observed that the said surrender did not amount to agreeing with the Revenue that the credits represent the assesseds concealed income, and that conditional surrender has to be distinguished from an unconditional surrender agreeing to its being concealed income. In that view, the Tribunal held that no penalty was livable under section 271(1)(c) of the Act.
5. The Commissioner thereupon filed an application before the Tribunal under section 256(1) of the Income-Tax Act praying that the question mentioned above may be referred to this Court. By its order, dated 8th July, 1975, the Tribunal rejected the application taking the view that no question of law arose out of the impugned order of the Tribunal, dated 20th November, 1974. The Commissioner has now filed the application under section 256 (2) of the Act.
6. A perusal of the impugned order of the Tribunal shows clearly that its decision was based on a consideration of the evidence on record, and its findings were only findings of fact. The tribunal was, thereforee, justified in taking the view that no question of law arose out of the impugned order of the Tribunal. For the same reason, we also decline to direct the Tribunal to refer the proposed question to this Court. Income-tax Case No. 68 of 1975 is dismissed in liming.