Agreed tax settlement for concealed income upheld where the assessee accepted the basis and later tried to resile.

Liability to income-tax arises under the charging provisions, while assessment and recovery are machinery provisions. The Court held that an assessee may waive the ordinary assessment route and settle concealed income on an agreed basis where the department accepts the proposal and the arrangement is acted upon. On the facts, the assessee had accepted the settlement basis and made part payment, so a later attempt to repudiate it was not entertained in writ jurisdiction after the authorities had altered their position. The disclosure-based assessment was therefore treated as valid and the challenge failed.

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Issues: Whether disclosure and settlement-based assessment of concealed income, made on the assessee's acceptance of an offered alternative, was invalid for want of authority of law under Article 265 and whether the assessee could later repudiate the agreed basis.

Analysis: Liability to income-tax arises from the charging provisions of the statute, while the assessment and recovery steps are machinery provisions. The validity of the tax liability does not depend on the existence of a formal assessment in every case, and the assessee may waive the machinery route and settle the quantum of liability on an agreed basis. On the facts, the assessee accepted the departmental proposal, the settlement was acted upon, and part payment was made. The Court also held that a belated attempt to resile from the arrangement, after inducing the authorities to alter their position, could not be countenanced in writ jurisdiction.

Conclusion: The disclosure-based assessment was held to be valid, the challenge failed, and relief was refused.

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