CENTURY FLOUR MILLS LTD. vs COMMISSIONER OF INCOME-TAX
This matter arises from a petition seeking a reference from the High Court regarding the levy of a penalty under the Income Tax Act, 1961, following a finding by the Appellate Tribunal that the applicant-company had concealed the true sale consideration of land. The High Court declined to call for a reference on the basis that the questions raised were questions of fact. The core legal question was whether the Tribunal's findings regarding the concealment of income and the levy of penalty gave rise to any question of law. The Supreme Court of India held that the High Court was entirely correct in its view, as the Appellate Tribunal had based its finding of concealment of income squarely on the material available on record. Consequently, no referable question of law arose. The key principle laid down is that concurrent or final findings of fact reached by the Tribunal based on record material do not warrant a reference to the High Court under tax law.
- Whether the levy of a penalty for concealment of income under the Income Tax Act raises a question of law when based on findings of fact?
- Is the High Court justified in declining to call for a reference when the Appellate Tribunal's findings are based on material on record?
- Whether the determination of real sale consideration and concealment of particulars of income constitutes a question of fact?
- Section 271(1)(c), Income Tax Act 1961
ORDER
1. The High Court (see (1998) 234 ITR 768) declined to call for a reference of the following questions (page 768): "(1) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the levy of penalty in respect of the sale consideration of the sale of the land is justified?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the sale consideration is not Rs.8,16,550 as disclosed in the deed of sale, but is a sum of Rs.16,43,539 as estimated by the Assessing Officer?
(3) Whether the Tribunal is right in law in holding that the extra consideration alleged to have been received by the Managing Director should also be attributed to the applicant-company?
(4) Whether the Tribunal is right in law in holding that the extra consideration alleged to have been received by the Managing Director of the applicant-company is also applicable for the purpose of levy of penalty under section 271(1)(c) of the Income Tax Act, 1961?
(5) Whether the Tribunal is right in law in holding that the applicant-company has concealed the particulars of the real consideration in respect of the sale of land and, consequently, the income is liable for penalty?"
2. It did so on the basis that they were questions of fact.
3. We have perused the order of the High Court and heard learned counsel and are in no doubt that the High Court was right. The Appellate Tribunal having arrived at the finding of concealment of income on the basis of the material on record, no question of law arose, reference of which could be called for.
Cited by 4 cases
- Messrs Honda Palace, Hyderabad vs The CIR WHT Zone, RTO, Hyderabad 2020 PTD (Trib.) 940
- COMMISSIONER INLAND REVENUE vs ADEEL BROTHERS 2017 PTD 1579
- Commissioner Inland Revenue vs M/s Adeel Brothers 2017 LHC 467
- Commissioner Inland Revenue vs M/s. Adeel Brothers 2017 P.C.T.L.R. 219