1982 (10) TMI 63

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..... leting an addition of Rs. 41,887 which had been made by the ITO. 3. The assessee is a registered firm. It had taken loans of Rs. 20,000 each from two lenders. namely, Shri N.R. Kenia and ;Shri Dharshi Lakhamshi Dedhia. The lenders subsequently gave confirmation that the transactions were havala entries only. The assessee was given an opportunity by the ITO to explain why the amounts of the loan .....

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..... the loans were genuine, it would submit to the addition of the amounts to the income provided no penalty is levied under s. 271(1)(c). On the basis of this letter, the ITO stated that the assessee had shown willingness for the addition of the amounts and he accordingly added the amount of Rs. 40,000 and also the interest of Rs. 1,887 paid on the same, to the income of the assessee. But the ITO ini .....

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..... n holding that the assessee had discharged the onus and that the assessment made by the ITO without further investigation cannot be sustained. The ld. departmental representative, however, fairly conceded that it was not proper on the part of the ITO to have acted upon the willingness of the assessee to make the addition of the amount, as the offer along with the condition attached to the same. He .....

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..... the High Court on the subject that the geniuses of the loans have to be accepted. It was thereafter that the assessee, for the sake of purchasing peace and early disposal of the matter, offered to accept the additions provided no penalty will be imposed on him. In our view, the ITO was in error in spelling out from this letter a willingness of the assessee to accept the addition, when the ITO was .....

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..... warrant the quashing of the assessment. It appears to be a case where the ITO was misled by the offer contained in the letter into not making the further enquiry and investigation which he was required to make. 7. In the result, the order of the Commissioner (A) is set aside and the matter is restored to the ITO for fresh disposal in accordance with law and in the light of the observations abov .....

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