9911796707
TMI Blog1989 (3) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... es purchased from time to time standing in the name of the assessee, his wife and son : 55,000 (iii) Deposits for a plot at Panchkula in the name of his wife : 800 (iv) Loans and advances and sundry debtors considering pronotes : 3,54,722 (v) Cash found : 3,325 --------------- 5,33,847 --------------- These figures were apparently arrived at after not only taking into account the books of account and documents but after consultation with the assessee. 4. On 27-3-1978, a settlement petition was filed for settling the affairs in the case of Arjan Dass, Prop. of M/s Arjan Dass Ranjit Kumar, Cloth Merchants, Sohana, Tehsil Kharar, Distt. Ropar. In this settlement petition, the preamble requested the Commissioner of Income-tax to consider the settlement petition with, "kind and sympathetic consideration and compassionate adjudication". The petition narrates that the petitioner migrated to India at the time of partition in 1947 from District Sargodha in Pakistan. For the first time, he submitted his return of income for the assessment year 1975-76 and started maintaining books of account in respect of cloth business w.e.f. 1-4-1974. In addition to income from cloth business, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome belonging to the petitioner. Agricultural income was estimated at Rs. 35,000 and non-agricultural income was taken at Rs. 2,86,935 (Rs. 3,21,935--Rs. 35,000). The Commissioner of Income-tax recorded in the settlement petition the spread over to be allowed to the assessee of the above sum over the period of 10 years for the assessment years 1969-70 to 1978-79. 8. Having indicated the total amount inclusive of agricultural estimated income in para 7 of the order of settlement dated 30th March, 1978, the Commissioner of Income-tax recorded that the penalties and interest under various sections are to be levied and charged as per the provisions of the Act to which the assessee has agreed. 9. In pursuance of the order of settlement made by the Commissioner of Income-tax, the Income-tax Officer proceeded to give effect to it. For the assessment year 1969-70, assessment was made on 29-2-1980 accepting the total income of the assessee for that year at Rs. 13,000 declared in the return on the basis of the order of settlement. On the basis of the said settlement for the assessment years 1970-71 to 1974-75, a common order was made on 29-3-1980 on the lines of the assessment completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts Annexures P1 to P8 to this writ petition be dispensed with ; (e) that any other relief which may appear to this Hon'ble Court to be just and proper on the facts and in the circumstances of the case be also granted ; and (f) costs of this writ petition be also awarded to the petitioner against the respondent herein." On the above petition, the Hon'ble Court made order bearing Civil Misc. Order No. 1809 of 1985 on 7th August, 1985. The Hon'ble Court recorded the facts relating to the settlement and recorded that, "no return has been filed on behalf of the respondent authorities to controvert this factual assertion on the part of the petitioner. In the absence of any denial on the part of the respondent authorities, the assertions made in this paragraph of the petition have obviously to be accepted for the purposes of this judgment. It is thus established that the factual premises on the basis of which the Income-tax Commissioner passed the impugned order Annexure P8 were not there. Besides this, the learned Counsel for the petitioner again appears to be right in submitting that the assessee had claimed waiver of penalties under three heads as specified under section 273A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R.B.G.M. Modi & Bros. (P.) Ltd. [1989] 28 ITD 349 (Delhi). 14. He further submitted that even if it may be accepted that there was an agreement, it was on mistaken belief of fact and law and such an agreement could not bind the assessee in not filing an appeal against the levy of penalties. The agreement with the assessee for not levy of penalty was apparently oral and in the settlement, the observations of the Commissioner of Income-tax that penalties have been agreed to were without any justification. For these submissions, he relied on the following judgments : (i) Addl. CIT v. Kishan Singh Chand [1977] 106 ITR 534 (All.) ; (ii) Chhat Mull Aggarwal v. CIT [1979] 116 ITR 694 (Punj. & Har.). The learned Counsel for the assessee further submitted that the assessee had bona fide belief that all that he had to pay, whatever the character of payments, would not exceed the amount of Rs. 1 lakh because otherwise he would not be left behind with any assets as the tax had been determined on estimated income. The extra penalties levied, therefore, violated this understanding and could be challenged. He relied on the ratio of the Andhra Pradesh High Court judgment in the case of CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation for imposition of penalty under any of the sections which have been invoked by the authorities below to saddle the assessee with the burden which was never agreed to, anticipated by or even apprehended at the time of settlement petition. The penalties on the facts of the case are without justification because the assessee wanted to live in peace after offering a major chunk of his income which the department had not detected and which had not been proved to be belonging to any of the years in which additions had been made on the basis of which penalties have been levied. The penalties may, therefore, be cancelled. 17. Opposing these submissions, the learned Departmental Representative, Shri B.S. Sandhu, contended that the appeals filed by the assessee are not competent because there were waiver petitions filed before the Commissioner of Income-tax and these were rejected. Reliance for this proposition was placed on the following judgments : (i) Smt. Ichhabai Panchal v. CWT [1982] 137 ITR 232 (Cal.) ; (ii) Smt. Kherunissa Allibhai v. CIT [1978] 113 ITR 443 (Guj.). 18. It was submitted by the learned Departmental Representative that even if it may be taken that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r file a petition claiming that an additional ground of appeal was required to be raised that the quantum of penalty levied is bad in law because the same should not have been levied on the basis of provisions of law on the date when the returns were due but the relevant date to be considered for levy of penalty should either be the date of filing of the return or the date of initiation of the penalty proceedings. On this additional ground, the learned Departmental Representative submitted that this additional ground is not maintainable as this was not projected before the authorities below and the assessee in the guise of raising this ground of appeal as sought to introduce a new item and a new subject matter altogether into the proceedings. 22. In the rejoinder, the learned Counsel for the assessee submitted that insofar as the judgment of the Punjab and Haryana High Court in Banta Singh Kartar Singh's case is concerned, it is clearly distinguishable on facts. It was argued that the embargo provided under section 273(A)(5) that every order made under this section shall be final and shall not be called into question by any court or any other authority is with regard to the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and interest under various sections are to be levied and charged as per the provisions of the Act, to which the assessee has agreed." We do not find any other material on the record to show that the penalty proceedings were not to be proceeded with. Therefore, all that can be said is that the penalty proceedings were to be disposed of in accordance with the provisions of the Income-tax Act, 1961, no doubt after taking into consideration the contentions raised on behalf of the assessee in regard to the leviability of penalties. The learned Counsel for the assessee is no doubt right in submitting that the assessee had not agreed to the levy of penalties nor even to the quantum of penalties. Even otherwise it is trite proposition that even though an addition can be made on agreed basis, there can be no levy of penalty even with the consent of the assessee and that penalty can only be levied if the requirements of the relevant penal provisions are satisfied. It is in this context that the learned Departmental Representative had submitted before us that the applicability of section 271 did not depend upon the consent of the assessee. 25. Next point to be decided relates to the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny amounts from the sundry debtors which were taken into consideration to arrive at the net assets of the assessee. All this shows that the desire of the assessee arose more out of the motive of avoidance of litigation and buying of peace. On such facts, the assessee apparently got a shock when assessment orders were made and therein it was mentioned that penalties will follow. The assessee filed a writ petition before the Hon'ble High Court. It is pertinent to note that no return was filed before the Hon'ble Court by the respondent. The Hon'ble Court has clearly recorded in the order that the facts asserted by the assessee, therefore, have to be taken as correct. On these facts, which are to be taken as correct, penalties under any of the provisions which have been invoked could not be levied upon the assessee. The learned Departmental Representative had laid great stress on the conduct of the assessee and the fact that it was only when the assessee was concerned that he came forward with the settlement. In this connection, reliance was placed by him on the facts mentioned in the order dated 30-3-1978 of settlement. The survey was made on 16-2-1978 whereas the assessment years inv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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