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TMI Blog1979 (10) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... imum penalty leviable under section 271(1)(c) of the Income-tax Act, 1961 ? " The brief facts giving rise to this reference may be mentioned. The assessee is a registered firm and carries on business of re-rolling mills at Mandi Gobindgarh. For the accounting year ending 30th September, 1965, relevant to the assessment year 1966-67, a return of income was originally filed on June 16, 1966, declaring an income of Rs. 42,131. The assessment was completed on January 7, 1967, and the total income was determined at Rs. 74,110. Subsequently, the ITO discovered that the assessee-firm had obtained hundi loans from M/s. Gurdit Singh Swaraj Singh, Majith Mandi, Amritsar, who denied having advanced any loan to the assessee and confessed that they wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosed as additional income. The assessee again sought the intervention of the Commissioner and after discussion with the assessee's representatives, the Commissioner incorporated the terms of the agreement arrived at by the assessee in a note dated January 1, 1971. The assessee's petition was not treated as a petition under s. 271(4A) of the Act. For this assessment year, the assessee agreed to be taxed on an amount of Rs. 39,376 (including interest amounting to Rs 8,388). The assessee also agreed to the levy of minimum penalty, the basis of which was given in the Commissioner's note as under: " 8. For 1966-67, the assessment was originally made on the basis of return filed before 1-4-1968. In response to notice issued under section 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot accepted by the Tribunal for the following reasons stated in its order : "The point to be considered in this appeal is whether the calculation of minimum penalty is correct. The penalty in this case arises out of the settlement proceedings and we feel that it will not be proper on our part to interfere with the penalty levied when even the calculation of penalty was specifically noted by the Commissioner of Income-tax in his note dated 1-1-1971 and when the assessee's chartered accountants, M/s. B. D. Bansal & Co., further specifically agreed before the Inspecting Assistant Commissioner for the levy of the impugned penalty. One of the very important considerations for the assessee agreeing to this penalty was that the Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. The contention of Mr. Bhagirath Dass, learned counsel for the petitioner, that since a sum of Rs. 32, 188 was levied as minimum penalty, the Tribunal ought to have gone into the question whether it was the minimum penalty or not, is without any merit. The Tribunal came to the conclusion that one of the very important considerations for the assessee's agreeing to this penalty was that the Commissioner decided that prosecution should not be launched in this case. The Tribunal observed that if the Commissioner knew at the time of settlement proceedings that the assessee would go back from the agreed penalty, in that case it is not known as to what would have been his reaction regarding the prosecution proceedings. As already observed, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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