2005 (9) TMI 658

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....e-Tax that loans of Rs. 60,000/- from Deena Dayal Aggarwal and Rs. 50,000/- from Mahendra Aggarwal shown in the books of the asssessee during the preceding year relevant to the assessment year were not genuine. Based on this information, the Assistant Director of Inspection had issued a notice under Section 132(3) of the Act, on the assessee to explain the book entries made in so far as the alleged amounts borrowed by different persons. In reply to the notice so issued the assessee while denying the contents of the notice, offered a sum of Rs. 1,15,000/- for the purpose of taxation as firm's income with a view to buy peace from the department provided no penalty proceedings would be initiated and the penalty is levied. 3. After receiving....

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....no penalty would be imposed. This letter of offer was given to the Assistant Director of Inspection during the proceedings under Section 132(3) and it was followed by a return showing the said amount as income and for all practical purposes the said return was accepted. We are, therefore, of the opinion that the department has failed to prove that the assessee had concealed the particulars of income and that penalty could be imposed on account of concealment. We are of the opinion that the decision of the CIT(A) is based on incorrect appreciation of  facts. In his order in para 8 he has not mentioned the fact that Shri Vimal Kumar Aggarwal was not cross-examined by the assessee. In a penalty proceeding the assessee had to be confronted....

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.... in the case of Union of India Vs. Banwari Lal Agarwal, 238 ITR 461. In the said decision, the Apex Court has observed as under; "........... Learned counsel for the respondent is also unable to draw our attention to any provision of the Income-tax Act, whereby a compromise assessment could have been arrived at between the respondent and the Commissioner of Income-tax. The High Court, in our view, was clearly in error in proceeding to accept the said contention of the respondent's counsel. The question whether there was any understanding or not, even if it could have been there is one of fact which will have to be proved before the trial Court." 8. The same view is retterated by this Court in the case of Commissioner of Income Tax Vs.....