BALAKRISHNA ERADI J. - This is a petition filed under section 256(2) of the Income-tax Act, 1961 (hereinafter called 'the Act'), praying that a direction should be issued by this court to the Income-tax Appellate Tribunal, Cochin Bench (hereinafter referred to as 'the Tribunal'), to draw up a statement of the case and refer to this court the following questions, which are said to arise out of the order dated 18th June, 1974, passed in I.T.A. No. 405/Coch/71-72 :
'(i) Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that penalty is imposable based solely on the so called admission of the assessee is correct in law
(ii) Whether, the finding of the Tribunal that the penalty is imposable is correct in law without finding that the amount surrendered was the income of the assessee during the account year relevant to the assessment year 1968-69, and that the said amount was concealed by the assessee during the account year relevant to the assessment year 1968-69
(iii) Whether there is any relevant material in the case to attract section 271(1)(c) of the Income-tax Act, 1961 ?'
The assessee who is the petitioner before us had applied to the Tribunal as per an application, R.A. No. 50/Coch/74-75, filed under section 256(1) of the Act to refer the aforementioned question to this court. That application was rejected by the Tribunal by its order dated 28th September, 1974, a copy of which has been produced along with the original petition as annexure '5'.
The assessee is a registered firm carrying on business in the processing and export of sea foods. For the year 1968-69, the assessee had filed a return showing a loss of Rs. 3,29,304. On its having come to the notice of the income-tax department that the partners of the firm had made considerable investments towards capital in certain other firms in which also they were partners, the department started an investigation into the sources of those investments. The partners thereupon approached the department for a settlement of their income-tax affairs and, after mutual discussions, an agreement was finally arrived at on September 27, 1969. As per that agreement, the partners of the assessee-firm agreed that a sum of Rs. 7 lakhs may be treated as business profits by the assessee from undisclosed sources during the period from 1964-65 to 1968-69, and that the said amount may be allocated and added on to the income of the assessee for those five years by a proportionate distribution on the basis of the business turnover for each of those years. It was further agreed by the firm that while assessing the said unaccounted income the department can levy the minimum penalty prescribed under the Act for the assessment years 1964-65 to 1968-69.
On the basis of the aforesaid agreement, the Income-tax Officer, while making the assessment of the assessee for the year 1968-69, made an addition of a sum of Rs. 2,84,727 as representing the income derived by the assessee from undisclosed sources. Simultaneously, he initiated penalty proceedings against the assessee under section 271(1)(c) of the Act. The Inspecting Assistant Commissioner of Income-tax, Ernakulam, to whom the said matter was referred, imposed on the assessee a penalty equivalent to the amount of the income found to have been concealed, namely, Rs. 2,84,727.
Against the said order imposing the penalty the assessee filed an appeal before the Income-tax Appellate Tribunal, Cochin Bench. one of the principal contentions put forward by the assessee in that appeal was that there was no evidence before the department to show that the assessee had concealed particulars of its income and the mere fact that in the agreement evidencing the settlement there was a clause stating that the department can levy against the assessee the minimum penalty, would not confer jurisdiction on the Inspection Assistant commissioner to levy a penalty under section 271(1)(c) of the Act in the absence of clear and positive proof that the assessee had either concealed particulars of its income or furnished inaccurate particulars of such income. The Tribunal rejected the said contention and held that penalty was imposable against the assessee. Notwithstanding the said finding, it, however, allowed the assessees appeal upholding another contention put forward by the assessee that the total income computation in the order of assessment circumscribes the quantum of concealment in penalty proceedings and since certain claims for deduction put forward by the assessable income as determined in the assessment year had been disallowed in the assessment order, it was not possible to hold that there was a concealment by the assessee in respect of Rs. 18,460 which was the amount of the total income determined in the assessment year. It is for canvassing the correctness of the finding entered by the Tribunal against the assessee on the first point that the assessee seeks to get the matter referred to this court.
We see no merit in this petition. True it is that a penalty under section 271(1)(c) can be lawfully levied against an assessee only if he is proved to have concealed particulars of his income or furnished false particulars of such income. An admission made by a person concerning a fact in dispute or a matter in issue is certainly a relevant item of evidence which can be taken into consideration in arriving at a finding on the said issue or question of fact. Hence the Tribunal was acting fully within its powers in placing reliance on the admission made by the assessee in the agreement dated September 27, 1969, evidencing the settlement for reaching the conclusion that there had been concealment of its income by the assessee. That is a pure finding of facts and, in the circumstances of this case, it is not possible to characterise it as either arbitrary or perverse. We are not, therefore, satisfied that any question of law which requires to be decided by this court arises from that part of the order of the Tribunal which relates to the finding aforementioned, correctness of which is sought to be challenged by the petitioner.
The original petition is therefore, dismissed but, in the circumstance we do not make any order as to costs.