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Issues involved: Application filed u/s 256(2) of the Income-tax Act, 1961 seeking direction to refer a common question of law regarding the leviability of penalty u/s 271(l)(c) for three different assessees for the same assessment year.
Summary: 1. The three applications sought a direction to the Tribunal to refer a common question of law regarding the leviability of penalty under section 271(l)(c) of the Income-tax Act for three different assessees but for the same assessment year. 2. The first assessee, Jaswant Rai, derived income mainly from his share as a partner in two firms and agreed to certain additions during assessment proceedings. 3. The second firm, Raunaq Ram Om Parkash, also agreed to additions related to unaccounted sales and cash transactions during assessment proceedings. 4. The third firm, Miri Ram Prem Chand, agreed to additions related to excess stock and undisclosed sales during assessment proceedings. 5. Penalty proceedings were initiated against all three assessees for concealing income, but they argued that they agreed to additions to avoid litigation and penalty. 6. The Commissioner (Appeals) accepted the assessees' appeals against the penalty, which was upheld by the Tribunal. 7. The department contended that the concealment of income was apparent and a question of law arose, while the assessees argued that they agreed to additions based on an assurance that no penalty would be imposed. 8. The department cited a case where penalty was justified when the assessee admitted to disputed income during assessment proceedings. 9. The Supreme Court's decision highlighted that not every case of penalty levy gives rise to a question of law. 10. The High Court emphasized that when there is an agreement between the assessee and tax authorities, it should not be challenged in appeal. 11. The Tribunal's finding that the assessees agreed to additions in one assessment year, subjecting themselves to higher tax, did not give rise to a question of law. 12. Ultimately, all applications seeking reference of the question of law were rejected by the High Court.
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