TaxTMI 
TaxTMI 
1980 (11) TMI 81
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....tribution of an amount Rs. 15,000 by his wife in respect of the properties purchased in her name and which was given out of her funds and also for savings from ancestral agricultural lands, he was offering a sum of Rs. 1,07,535 which represents the value of the properties acquired between the years 1962-63 to 1974-75. He requested that the said sum may be spread over all the above years. It was further stated that this action was taken by him voluntarily for setting the income-tax affairs. The attention of the Commr. was also drawn to the letter addressed by the assessee to the ITO during the assessment proceedings which contained the particulars of his savings from his agricultural income and from business income from 1962 to 1972. It was further stated that according to the statement that the assessee had available resources to the extent of Rs. 82,000 excluding a sum of Rs. 44,700 found invested by that time in the business. The assessee claimed that even while the above petition was pending before the Commr. yet another petition was filed before him on 31st May, 1975 offering for assessments all the assets standing in his name to the tune of Rs. 1,32,916 and also the assets sta....
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....that they were equivalent to the incomes concealed for the asst. yrs. 1971-72, 1972-73 and 1973-74. The assessee has come on appeal before us against the said orders of the IAC. 3. The ld. counsel for the assessee at the outset submitted that the orders of the IAC passed under s. 271(1)(c) and 274(2)on 30th March, 1978 are clearly without jurisdiction. In support of this submission he referred to the order of the Special Bench of the Tribunal, Cochin Bench in ITA Nos. 40, 41 & 42(Coch)/77-78 for the asst. yrs. 1972-73, 1973-74 and 1974-75 in the case of Shri Joseph John vs. The ITO Co. Cir. A-Ward, Ernakulam, dt. 1st March, 1980 in which it was held by the Tribunal that the deletion of s. 274(2) of the IT Act from the statute book w.e.f. 1st March, 1976 put to an end the jurisdiction of the IAC even in respect of cases which were referred to him validly by the ITO at the time of reference, and, therefore, the ITO has no jurisdiction to levy penalty. The ld. counsel further submitted that the penalties are also invalid in law for the reason that even as per the order of the IAC it was made clear that the concealed income which was taken as minimum penalty for all the years under ap....
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....ad not agreed to the levy of any penalty and that this will be clear from the fact that the penalties levied along with the taxes would be much more than the assets themselves. He further submitted that even if the assessee concedes concealment it is for the Department to establish concealment and that there should be a finding that there was concealment of income. He referred in this connection to the decision of the Mysore High Court in the case of D. Halappa Sons vs. CIT (1974) 95 ITR 542 (Mys). He also referred to the decision of Gujarat High Court in the case of CIT vs. Vinayachand Harilal (1979) 8 CTR (Guj) 247 : (1979) 120 ITR 752 (Guj). On the basis of the above decisions he urged that the Revenue should establish that the particular amount which is alleged as representing concealed income related to the relevant assessment year. In the absence of such proof he urged that penalties cannot be levied. He also strenuously relied upon the ruling of the Madras High Court in the case of CWT vs. P.Krishnaswamy Mudaliar (1977) 110 ITR 301 (Mad) in which he submitted that the facts are on all fours as in the present case. He further referred to the ruling of the Madras High Court in....
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....s are passed on the same date viz., 31st May, 1975. The assessment orders state that they were made under s. 143(3) of the IT Act, 1961. The assessments were completed by accepting the returns furnished by the assessee and there is no indication in the assessment orders that penalty proceedings were being initiated. But the ld. Deptl. Rep. referred us to the record sheet of the officer in which it has been noted that penalty proceedings were being initiated by him for concealment of income. From the assessment orders it is clear that the ITO did not make any inquiries and there is a finding by him that the assessee concealed his income or furnished inaccurate particulars of his income for the said assessment years. As a matter of fact these assessments came to be made by the ITO solely on the basis of the settlement arrived at by the assessment with the CIT. It is the case of the assessee that until the asst. yr. 1968-69 he did not get any taxable income from the business carried on by him and, therefore, he did not file any return, that for the asst. yrs. 1969-70 and 1970-71 also he did not get any taxable income, and, therefore, no returns were filed, that for the asst. yr. 1972-....
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....ax affairs settled amicably and for purchasing peace. Though in the minutes of CIT referred to above it is stated that penalty at 40 per cent of the concealed income would be levied no material or record is brought to our notice to show that the assessee did in fact accept this condition. The ld. Deptl. rep. strenuously urged that in the assessee's letter addressed to the Commr. on 31st March, 1975 the assessee had accepted the terms of settlement and, therefore, it should be inferred that the assessee had agreed for the levy of penalty. But then this overlooks the fact that the assessee had filed two letters before the CIT one on 21st March, 1975 and another on 31st March, 1975 and it is not clear from the records whether the assessee had in fact agreed to the levy of penalty. But the fact remains that out of the total assets of Rs. 1,74,698 which has been directed to be spread over by the CIT on the basis of settlement most of the assets were explained by the assessee either as being accounted for or as being out of the savings from agricultural income. It is difficult to infer that the assessee would have agreed to the levy of penalty for all the years under appeal as well as fo....