COMMISSIONER OF INCOME TAX Vs. BACHU & CO.

JUDGEMENT

(1.) THESE appeals are filed by the Revenue under s. 260A of the IT Act against the orders of the Tribunal confirming cancellation of penalty levied on the assessee under s. 271(1)(c) of the IT Act for the asst. yrs. 1988 -89 and 1990 -91.

(2.) WE heard learned senior counsel appearing for the Revenue and learned counsel appearing for the respondent assessee.

(3.) THE assessee filed return declaring income of Rs. 1,32,227 and Rs. 3,80,000 for the asst. yrs. 1988 -89 and 1990 -91 respectively. The business premises of the assessee, who was engaged mainly in distribution of edible oil, was searched prohibitory order under s. 132(3) for freezing the bank deposits totalling Rs. 12,25,000. Even though, originally, after search, income for the asst. yr. 1988 -89 was determined at Rs. 19,83,770, the same was set aside by the CIT(A) and the assessment was remitted back for reassessment. The AO appointed an auditor and got the assessee's accounts audited by him, under s. 142(2A) of the Act. In the audit report submitted by the said auditor, he had brought out some points of discrepancies, suppressions and defects in the accounts. The AO, on the basis of the audit report, refixed the income at Rs. 28,56,700. However, in the appeal filed by the assessee, the CIT(A) reduced the estimation of income at Rs. 6,00,000 as against Rs. 1,32,227 returned by the assessee.