9911796707
TMI Blog1986 (2) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the accounting years 1962, 1963, 1964 and 1965. An order was passed on the said application by the Commissioner of Income-tax on December 29, 1970, as follows: " 1. The peak amount of the alleged hundi loans amounting to Rs. 1, 15,000 shall be assessable in the following assessment years: Assessment years Amount assessable Rs. 1960-61 5,000 1961-62 28,500 1962-63 17,500 1964-65 27,500 1965-66 45,000 Interest debited in the books of accounts on these loans shall be disallowed in the respective assessment years. Penalty equivalent to 20% of the tax sought to be evaded shall be imposed in respect of the amounts mentioned above as well as interest to be disallowed in the respective assessment years. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be introduced in the books of the assessee but held that even if such tax and penalty liabilities of the partners were allowed to be introduced, the same would come to only of Rs. 28,474 which, added to the tax and penalty liabilities of the assessee, viz., the above amount of Rs. 29,488, would come to only Rs. 56,962, which was less than Rs. 57,000. The Income-tax Officer accordingly treated Rs. 55,971, being the difference between Rs. 1,13,471 less Rs. 57,500, which was introduced into the account, as income from other sources and taxed the same. Being aggrieved, the assessee preferred an appeal before the Appellate Assistant Commissioner. After considering the order of settlement, the Appellate Assistant Commissioner came to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l was directed by this court to refer the following question as a question of law arising out of the order of the Tribunal for the opinion of this court: " Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in restoring the addition of Rs. 55,971 under the head 'Income from other sources' as made by the Income-tax Officer? " At the hearing, the learned advocate for the assessee submitted that on a plain reading of the terms of settlement, it was open to the assessee to introduce the entire tax and penalty liabilities of the assessee-firm as also of its partners for the said assessment years in its books and the assessee had rightly introduced the said amount of Rs. 1,13,471 which was the aggregate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal had correctly interpreted the terms of settlement between the parties. On a careful reading of clause 7 of the terms, it appears to us that what the assessee was permitted to introduce in its accounts was either 50% of the disclosed amount or an amount equivalent to the tax and penalty liabilities arising as a result of the settlement, whichever was higher. If we assume in favour of the assessee that such tax and penalty liabilities included the tax and penalty liabilities of the partners, even then the assessee would have to establish that the amount introduced, namely, Rs. 1,13,471, was equivalent to the tax and penalty liabilities arising as result of the settlement. From the order of the Income-tax Officer where particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X
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