Conditional waiver of tax deduction claim must be decided on merits when linked to penalty remission.

Dealers' offer to abandon a deduction claim under the first proviso to section 9 of the Bombay Sales Tax Act was held to be conditional because it was expressly linked to remission of post-assessment penalty. The surrounding correspondence and hearing notes did not support treating the proposal as an unconditional waiver. A conditional surrender does not become final merely because the condition may not be fully acceptable; if the condition is not accepted, the authority must decide the deduction claim on merits. The reference was answered in favour of the assessees.

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Issues: Whether the dealers' offer to forego the claim for deduction under the first proviso to section 9 of the Bombay Sales Tax Act, 1953, was conditional upon remission of post-assessment penalty, or whether it amounted to an unconditional abandonment of the claim.

Analysis: The letter dated 28 July 1965, read with the surrounding circumstances and the recorded proceedings before the Deputy Commissioner, showed that the dealers consistently linked any surrender of the deduction claim with remission of the post-assessment penalty. The expression used in the written offer was expressly conditional, and the brief notes of hearing did not justify treating the matter as an unconditional abandonment. A conditional proposal does not become unconditional merely because the condition may not have been capable of full acceptance. Once the condition was not accepted, the authority was bound to adjudicate the deduction claim on merits.

Conclusion: The offer was conditional, not unconditional, and the authorities were required to decide the deduction claim on merits. The answer to the reference was therefore in favour of the assessees.

Ratio Decidendi: A surrender of a tax deduction claim expressed to be contingent on remission of penalty cannot be treated as an unconditional abandonment unless the condition is clearly waived or accepted.

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