COMMISSIONER OF INCOME TAX Vs. BOMBAY AUTOMOBILES

JUDGEMENT

(1.) PURSUANT to the direction given by this court in I.T. Case No. 165 of 1975 dated April 2, 1976, the Income-tax Appellate Tribunal, Hyderabad Bench, has submitted a statement of the case for the opinion of this court on the following question of law :

(2.) WE may notice the material facts which gave rise to this question. The respondent-assessee is a registered firm. For the assessment years 1962-63 and 1963-64, corresponding to the accounting years ending with March 31, 1962, and March 31, 1963, respectively, assessments of the assessee-firm were completed under Section 143(3) read with Section 147 of the I.T. Act, 1961, on February 11, 1970. The assessee could not satisfactorily explain cash credits and finally offered for assessment sums of Rs. 25,000 each representing peak credits on hundies. The ITO added the same, as the assessee's income from undisclosed sources for each of the two assessment years. The assessee filed an application to the Commissioner on May 2, 1969, under Section 271(4A) which corresponds to the present Section 273A to the effect that he is unable to satisfactorily account for the peak credits of Rs. 25,000 for each of the two assessment years and, therefore, requested him to treat the same as undisclosed income by spreading it over the previous four years to lessen the burden and also requested him to take a lenient view of the matter and waive the penalty proceedings under Section 271(1)(c). The ITO by his letter dated February 5, 1970, informed the assessee that there was no case for settlement under Section 271(4A) and waiver of penalty under Section 271(1)(c), nor the spreading over of concealed income representing the impugned hundi credits in the account books can be allowed for more than two years, that is, Rs. 25,000, for each assessment year and that the minimum penalties under Section 271(lXc) leviable under the law would be imposed for each of the years, and settlement will be effected if the aforesaid terms are acceptable to it. In the copy of the letter addressed to the income-tax practitioner of the assesses, it is mentioned by way of reply :

(3.) THE submission of Mr. P. Rama Rao, learned counsel for the revenue, is that the assessee has agreed for the levy of minimum penalty and it is not open for it to contend that this is not a case for the levy of penalty under Section 271(1)(c) and that the view taken by the Tribunal is erroneous in law. This claim of the revenue is opposed by Mr. Y.V. Anjaneyulu, counsel for the assessee, contending, inter alia, that there was no true and valid consent for levy of minimum penalty, and it was accepted by the assessee on a bona fide wrong impression of the legal position and the explanation offered by the assessee has been rightly accepted by the Tribunal and that finding is really binding on this court.