COMMISSIONER OF INCOME TAX Vs. VIR KHANNA

JUDGEMENT

(1.) ON an application filed by the Revenue under Section 256(1) of the IT Act, 1961 (for brevity, the Act'), the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (for brevity, 'the Tribunal') has referred the question of law, which is claimed to have emerged from its order dt. 8th Dec, 1994, passed in ITA No. 870/Asr/1989 in respect of asst. yr. 1984 -85. The Tribunal has referred the following question of law for determination of this Court:

(2.) THE assessee is an individual having income from salary, share from the firm and income from other sources. He filed his return on 31st Oct., 1984 for the asst. yr. 1984 -85 declaring an income at Rs. 6,22,930. The assessee had performed the marriage of his daughter at Taj Hotel, Delhi. During the survey conducted at Taj Hotel, Delhi on 7th Aug., 1984, under Section 133A(5) of the Act, certain documents relating to the marriage expenses of the assessee's daughter were discovered by the survey party. Accordingly, the assessee was summoned under Section 131 of the Act. He was also served along with a letter dt. 14th Nov., 1984, addressed by the AO to explain the total expenditure on marriage of his daughter and the source of the aforementioned expenses. The matter was fixed on 26th Nov., 1984 when the assessee filed the details of marriage expenses along with photostat copies of the bills amounting to Rs. 18,388. He also produced on record photostat copies of the receipts of payment made to Taj Hotel, Delhi by two drafts of Rs. 10,000 each. Thereafter, the assessee was confronted with a photocopy of bill of Rs. 1,26,344 in respect of banquet challan, which was discovered by the survey party of the Department at Taj Hotel, Delhi. The assessee denied the payment or knowledge of this bill and requested for supply of copy of those documents. However, he obtained these documents subsequently from the Court where criminal proceedings for prosecution for attempting evasion of tax, under Section 276 as well as for concealment of income, were launched by the Department on 29th March, 1985.

(3.) WE have heard learned Counsel for the parties at a considerable length and are of the view that the order passed by the Tribunal does not suffer from any legal infirmity because Circular No. 451, dt. 17th Feb., 1986 issued by the Central Board of Direct Taxes (for brevity, 'the CBDT') itself clarifies that the ITOs were required to be liberal in waiver of interest in such cases. It would be relevant to notice question No. 5 and its answer, which was one of the questions on which clarification was sought from the CBDT, which reads as under: