9911796707
TMI Blog1992 (1) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... st Oct., 1981 under s. 147(a) was served on the assessee, in response to which it filed its return on 21st Nov., 1981 declaring the same income which had been declared on 7th July, 1978. After the receipt of the order dt. 23rd Feb., 1981 under s. 132(5), it appears that the assessee had moved a settlement petition dt. 10th Oct., 1981 (received in the Office of the CIT, Udaipur on 21st Oct., 1981) before the Commissioner and settlement was arrived at as per letter No. ADI/CIT/JE/82-83/618 dt. 12th/14th Oct., 1982 of the CIT, Jodhpur determining the following additional income: . Rs. (i) Unexplained "Udarat' A/c 23,154 (ii) Profit earned on the sale of old tyres. 7,000 (iii) Disallowance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the ITO was wrong in mentioning in para 4 of the penalty order that there was shortage of cash on many dates. According to Shri C.S. Agarwal, this was not factually correct. Reliance was placed on the decision of the Supreme Court in the case of Sir Shadilal Sugar General Mills Ltd. Anr. vs. CIT (1987) 64 CTR (SC) 199 : (1987) 168 ITR 705 (SC) in which it was held that if the assessee had agreed in order to maintain good relations with the Department that certain items of debit represented income, no penalty under s. 271(1)(c) was leviable. He pointed out that excess cash was available with the assessee. Reliance was also placed by him on the fact that for the asst. yr. 1981-82, similar penalty proceedings initiated under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The rival submissions as also the decisions referred to above have been considered. During the course of the search, the Department found that the assessee was maintaining two cash books, namely, 'Kachi' and 'Pakki'. There were certain entries in the 'Kachhi' cash book which were described by the assessee as 'Udarat' entries or 'Hathudhari'. They were recorded on each side of the cash book before the regular transactions of the date entered. The other entries of the each date were found transferred to the 'Pakki' cash book but the entries were in the form of 'Udarat and Hathudhari were not transferred. During the course of proceedings under s. 132(5), the entries of Rs. 4,500 in the name of Shri Srichand and Rs. 1,000 in the name of Ibrah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he complete background leading to the addition. However, one thing is certain that the settlement made by the Commissioner did not seem to contemplate that no proceedings under s. 271(1)(c) would be initiated against the assessee. For the same reason, therefore, the contention raised on behalf of the Department that there was an agreement to levy penalty under s. 271(1)(c) at the minimum could also not be taken to be established. We, therefore, have to see as to whether the addition made because the assessee felt driven to the wall or the addition were made because the assessee agreed to the same in order to purchase peace. In this connection, it is also relevant to notice that in the written reply dt. 29th Nov., 1984, the contention raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter guide and the fact that the Department itself dropped the penalty proceedings under s. 271(1)(c) for the asst. yr. 1981-82 becomes more relevant particularly when the same settlement formed the basis of the addition for that year. As we have already seen above, out of the amount of Rs. 35,896, the addition for 'Udarat' was Rs. 10,896. The case taken up by the assessee has been same. We find that in para 2 of its settlement petition dt. 10th Oct., 1981, the assessee had clearly said that though its application dt. 16th March, 1981 filed under s. 132(11) was pending with the Commissioner, but with a view to purchase peace of mind, but to avoid further litigation and expenses, thereon, the assessee was approaching the Commissioner to settl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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