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Issues:
- Imposition of penalties under section 271(1)(c) of the Income-tax Act for assessment years 1983-84 to 1986-87. - Contention regarding the cancellation of penalties by the CIT (Appeals) based on procedural lapses and tacit understanding between the assessee and the Department. - Arguments presented by the Department and the assessee regarding the cancellation of penalties. - Examination of incriminating material, commission rates, and agreement between the assessee and the Department. - Analysis of relevant case laws and legal precedents. - Final decision upholding the orders of the CIT (Appeals) and dismissal of the appeals. The judgment pertains to the imposition of penalties under section 271(1)(c) of the Income-tax Act for the assessment years 1983-84 to 1986-87. The appeals were filed against the orders of the CIT (Appeals) canceling the penalties levied by the Assessing Officer. The assessee, a commission agent, derived income from the sale of Oranges/Mosambis. The Assessing Officer initiated penalty proceedings after discrepancies were found between the commission disclosed in the returns and the commission the assessee should have received based on assumptions regarding commission rates. The CIT (Appeals) canceled the penalties citing procedural lapses and a tacit understanding between the assessee and the Department to avoid penalty imposition. The Department contended that the penalties were canceled without adequate justification, emphasizing that the assessee agreed to the additions forming the basis for the penalties. They argued that there was no evidence of a tacit understanding to waive penalties and that the assessee's explanation regarding return commission was not supported by records. The assessee, on the other hand, argued that no incriminating material was found during the search, commission rates were variable, and the income was offered based on an understanding to avoid prolonged litigation. They relied on a Tribunal decision to support the cancellation of penalties. The judgment analyzed the presence of incriminating material, commission rates, and the agreement between the assessee and the Department. It was noted that no independent evidence pinned down the assessee for unaccounted commission, and the Assessing Officer's assumptions lacked substantial support. The judgment referenced legal precedents to highlight that agreed additions do not necessarily imply concealment of income, especially in the absence of concrete evidence. Ultimately, the orders of the CIT (Appeals) were upheld, dismissing the appeals and canceling the penalties imposed by the Assessing Officer.
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