COMMISSIONER OF INCOME TAX Vs. KIRAN AND CO

JUDGEMENT

(1.) BY this application under S. 256(2) of the IT Act, 1961, made at the instance of the Revenue, the CIT seeks direction of this Court to the Tribunal to refer the following three questions to this Court :

(2.) AFTER hearing learned counsel on both sides, we have reached the conclusion that no referable question of law arises. Our reasons in brief are as under : The relevant assessment years are the asst. years 1977 78 and 1979 80.

(3.) THE AO completed the reassessment proceedings for the asst. year 1977 78 by adding a sum of Rs. 1,37,494 to its income. The AO completed the assessment proceedings for the year 1979 80 by adding a sum of Rs. 2,33,708 to the income. The ITO thus acted upon the abovereferred offer. However, penalty proceedings were initiated against the assessee as contemplated under S. 271(1) (c) of the IT Act, 1961. Apart from the said letter dt. 5th March, 1986, there was no other material whatsoever before the authorities on the basis of which it could be held that the assessee had concealed its income during the relevant years. However, the ITO levied penalty on the assessee as set out in his order dt. 24th March, 1986. The amount of penalty was reduced by the CIT (A.). The assessee filed a petition under S. 273A of the IT. Act for waiver of interest and penalty. By order dt. 4th March, 1988, the CIT reduced the penalty imposed to 30 per cent. of the tax on the income sought to be evaded during the years. The Tribunal reached the conclusion that the onus was on the Revenue to prove that the assessee had concealed its income and the Revenue had failed to discharge the said onus. The only material before the IT authorities for imposition of the penalty on the assessee was the abovereferred conditional letter of settlement, i.e., letter dt. 5th March, 1986. In CIT vs. Haji Gaffar Haji Dada Chini (1987) 63 CTR (Bom) 130 : (1988) 169 ITR 33 (Bom), our High Court held in almost similar circumstances that the letter addressed by the assessee to the ITO offering credits in respect of the hundi loans for assessment stating therein that the question of imposition of penalty may be decided on the merits did not amount to an admission of concealment of income and the levy of penalty on such basis was liable to be quashed. In this case, it was further held by the High Court that if the Tribunal had taken a possible view having regard to the facts of the case, there would be no occasion for the High Court to interfere with the order of the Tribunal in the reference jurisdiction.