COMMISSIONER OF INCOME TAX Vs. P GOVINDASAMY

JUDGEMENT

(1.) Pursuant to the order of this Court dated 8.7.1997 made in T.C.P.No.180 of 1996, the Income-tax Appellate Tribunal, C Bench, Madras, stated the case and referred the following questions of law for the opinion of this Court. The questions referred to are as follows:

(2.) Whether on the facts and in the circumstances of the case the Tribunal was right in law in failing to appreciate the fact that the assessee's acceptance of the income assessed was not voluntary one?"

(3.) The facts of the case are as follows: For previous year ended on 31.3.1980 with reference to the assessment year 1980-81, the assessment was completed exparte on 28.2.1983 since the assessee failed to file his return within the time allowed under section 139 of the Income-tax Act, determining the assessee's income at Rs.14,076/-. The assessee filed the return on 28.3.1983 disclosing a loss of Rs.79,097/-. On appeal by the assessee, the Commissioner of Income-tax (Appeals) set aside the exparte assessment order and directed the Assessing Officer to make fresh assessment. While making fresh assessment, the Assessing Officer determined the total income of the assessee for the said assessment year at Rs.4,81,320/- by making certain additions. The additions so made in the course of fresh assessment were as follows: "(a) Lease rent from Odeon Theatre : Rs.55,466/- (b) Sundry cash credits occurring in : 1,50,000/- the cash-flow statement filed by the assessee. (c) Estimated addition towards insuffi-: 14,000/- cient drawings for personal expenses (d) Estimated addition towards unaccounted: 15,000/- investment in jewellery. (e) Alleged loan from Century Investment:5,03,110/-" Corporation As regards the addition of Rs.5,03,110/- as shown in item (e) above, it was the case of the Department that the Century Investment Corporation was not a genuine firm as the firm consisted of three partners, the wife, the son and daughter of the assessee and two minors admitted to the benefit of the partnership. The assessee carried the assessment order dated 14.3.1986 on appeal to Commissioner of Income-tax (Appeals), but ultimately did not press the appeal by filing a letter to the effect that the assessee thought it best to purchase peace with the Department and found no alternative save to accept the amount of Rs.5,03,110/- at his hands and thereby the appeal was dismissed on the strength of the letter of the assessee as stated above. The Assessing Officer while making the fresh assessment on 14.3.1986 had put the assessee on notice for initiation of penalty proceedings under Section 271(1)(c) of the Income-tax Act. The assessee by his letter dated 9.3.1988 explained that he had come forward with a settlement with the Commissioner by offering the additions made in the assessment at his hands. Such offer was made under the Amnesty Scheme and therefore prayed the penalty proceedings may be dropped. The Assessing Officer brushed aside the explanation offered by the assessee on the footing that the case was not covered by Amnesty Scheme. The Assessing Officer was of the view that the offer of the assessee of the cash credit aggregating to RS.1,50,000/- for assessment at the assessment stage and withdrawal of the appeal relating to loan amount of RS.5,03,110/- before the Commissioner of Income-tax (Appeals) amount to admission and thus the assessee has concealed the particulars of income. On that basis, the Assessing Officer levied penalty in a sum of Rs.3,21,510/- under Section 271(1)(c) of the Act. On appeal by the assessee, as per the statement of case, (the order of the Commissioner of Income-tax (Appeals) in penalty proceedings was not made available to us.), the Commissioner of Income-tax (Appeals) held that there was concealment only in respect of two counts viz., (1) the alleged loan aggregating to Rs.5,03,110/- from Century Investment Corporation and (2) unexplained investment of Rs.15,000/- in jewellery. Accordingly, the Commissioner of Income-tax (Appeals) directed to delete the penalty levied in respect of the low drawings and the understatement of lease rent from Odeon Theatre. The assessee questioned the order of the Commissioner of Income-tax (Appeals) before the Tribunal. The Tribunal following the decision of the Supreme Court in SIR SHADILAL SUGAR AND GENERAL MILLS LIMITED AND ANOTHER VS. COMMISSIONER OF INCOME-TAX, DELHI reported in (1987) 168 ITR 705 and also the decision of this Court in the case of COMMISSIONER OF INCOME-TAX VS. PIONEER ENGINEERING SYNDICATE reported in (1991) 188 ITR 287, deleted the penalty by allowing the appeal on the ground that the Department has not made out a case for levy of penalty under section 271(1)(c) of the act.