1988 (3) TMI 18

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.... dealer in iron and steel scrap. It is stated that he had voluntarily made an application for settlement of his tax liability in view of certain assets acquired by him and also by his wife. The Income-tax Officer found that, during the assessment years 1971-72 to 1974-75, the total value of assets acquired by the assessee and his wife was Rs. 1,90,436. Possibly, the Officer might have expressed, the view that he would subject the above sum of Rs. 1,90,436 to tax and that induced the assessee to go for purchasing peace by settling matters. The assessee stated that most of the assets acquired by him and his wife were recorded in his books. Only portion of the assets was not so accounted. The portion of unaccounted assets was quantified at Rs.....

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....letter dated May 31, 1975, wherein the assessee sets out various other particulars and finally concedes that the settlement may be given effect to. Either the exercise is a futile exercise or the assessee had meant to convey something which he did not convey in the letter. Eventually, penalties were levied for the assessment years 1971-72, 1972-73 and 1973-74. The amounts of penalties were Rs. 15,844, Rs. 15,644 and Rs. 16,041, respectively. The assessee questioned the tenability of the penalties levied. The matter came up before the Tribunal. The Tribunal held that a substantial moiety of the sum of Rs. 1,74,698, agreed for settlement, was, in fact, recorded in the books of the assessee as assets acquired. It was incomprehensible that the ....

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....ntial portion of the sum of Rs. 1,74,698, agreed to be assessed was shown to have been recorded in the books of account and the Tribunal was satisfied with reference to the correctness of that claim. Indeed, the Tribunal was a little surprised as to why in respect of the matters accounted, the assessee should have come forward for settlement. Taking an overall view of the matter, the Tribunal came to the conclusion that the decision of the earlier Bench did not require any modification and affirmed the cancellation of the penalties by the earlier Bench. In these circumstances, the Commissioner asked for a reference under section 256(l ) of the Income-tax Act. 1961, and that is how the matter is laid before us. We have heard learned standin....