2000 (1) TMI 38 - HC - Income Tax

Summary

Issues Involved:
1. Justification of the Tribunal in setting aside the order of penalty.
2. Application of the doctrine of promissory estoppel.
3. Estoppel against a statute.
4. Remittance of the matter back to the Tribunal for fresh consideration.

Summary:

1. Justification of the Tribunal in setting aside the order of penalty:
The Tribunal set aside the penalty order on the grounds that the Revenue had agreed not to initiate penalty proceedings. The Tribunal relied on the concept of promissory estoppel, asserting that the Revenue's agreement prevented them from imposing penalties. However, the court noted that the Tribunal did not consider the merits of the assessee's case.

2. Application of the doctrine of promissory estoppel:
The court elaborated on the principle of promissory estoppel, which prevents a party from going back on a promise if the other party has relied on it to their detriment. The court cited several precedents, including Robertson v. Minister of Pensions [1949] and Union of India v. Anglo Afghan Agencies [1968], to explain that promissory estoppel is an equitable doctrine aimed at avoiding injustice. The court emphasized that the doctrine applies to both private individuals and public authorities.

3. Estoppel against a statute:
The court clarified that there cannot be estoppel against a statute. It referenced Union of India v. Banwari Lal Agarwal [1999] 238 ITR 461 to assert that no statutory provision permits a compromise assessment. The court also noted that the Tribunal misappreciated the ratio laid down in Sir Shadilal Sugar and General Mill Ltd. v. CIT [1987] 168 ITR 705, which does not universally preclude penalty imposition when an assessment is completed by accepting the assessee's offer.

4. Remittance of the matter back to the Tribunal for fresh consideration:
The court concluded that the Department must consider the explanation offered by the assessee regarding the amount offered to be taxed. Penalty is not automatic and depends on the acceptability of the assessee's explanation. Since the Tribunal did not consider this aspect, the court remitted the matter back to the Tribunal for fresh consideration on the merits. The parties are allowed to place additional materials for the Tribunal's consideration.

Conclusion:
The reference is answered by remitting the matter back to the Tribunal for a fresh evaluation of the assessee's explanation and any additional materials submitted.