TMI Blog2006 (7) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had concealed income. The facts would show otherwise. In such circumstances, we find it difficult to sustain the order of the Tribunal.- tribunal was not justified in holding that penalty proceedings could not be initiated. - - - - - Dated:- 7-7-2006 - Judge(s) : K. S. RADHAKRISHNAN., V. RAMKUMAR. JUDGMENT The judgment of the court was delivered by K. S. RADHAKRISHNAN J.-The Commissioner of Income-tax has come up with this appeal aggrieved by the order of the Income-tax Appellate Tribunal, Cochin Bench in I.T.A. No 650/Coch/95. Three questions of law have been raised for our consideration, which we have redrafted and consolidated as follows: "Whether, on the facts and in the circumstances of the case, the Tribunal was justif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quested that no penalty be levied. The Assessing Officer however completed the assessment by assessment order dated March 31, 1993, and also initiated penalty proceedings under section 271(1)(c) of the Act. Penalty proceedings were later completed by proceedings dated September 10, 1993, whereby penalty of Rs. 1,38,675 was imposed. Aggrieved by the same, the assessee took up the matter in appeal before the Commissioner of Income-tax (Appeals) and the appeal was dismissed holding that the assessee had deliberately concealed the details of income from liquor business and, therefore, levy of penalty was confirmed. The assessee then took up the matter before the Income-tax Appellate Tribunal. Placing reliance on the decision of the Madras H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... good the several loss. Later the assessee agreed to the proposal to estimate the income from liquor business at Rs. 3,45,643 subject to the conditions mentioned in the said letter. Counsel placed reliance on the decision of the Madras High Court in Adamkhan's case [1997] 223 ITR 264, and also the decision of the Supreme Court in Sir Shadilal Sugar and General Mills' case [1987] 168 ITR 705. Reference was also made to the decision of the Calcutta High Court in CIT v. Sarda Rice and Oil Mills [1979] 117 ITR 917. The scope of section 271(1)(c) was considered by this court in K. P. Madhusudanan's case [2000] 246 ITR 218 and the said decision was affirmed by the apex court in K. P. Madhusudanan's case [2001] 251 ITR 99. We may examine the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e undersigned had with you today. In order to make a final settlement with regard to the tax liability of my client Shri R. Kesavan Nair and to purchase peace for him, I agree to your proposal to estimate the income from liquor business at Rs. 3,45,643 and to treat the loan of Rs. 1,20,000 from his wife T. Saraswathy Amma as unexplained income, subject to the following: (i) The additional income estimated from liquor business as above is treated as utilised for meeting the difference in the cost of construction of the new building as found by the valuation officer and as declared by the assessee. (ii) No penalty is levied. Thanking you, Yours faithfully, (Sd.) K. K. Aiyappan Piliai. The abovementioned letter would show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had conceded concealment of income. Imposition of penalty is not dependent upon consent or otherwise of the assessee and not on the basis of agreement or concession. Penalty proceedings are penal in nature. Penalty can be imposed once concealment of income is noticed and unearthed. This legal position is well-settled. Reference was made to the decision of the Madras High Court in Rathnam and Co. v. IAC [1980] 124 ITR 376. The Tribunal proceeded as if the assessee's offer was conditional if the assessee accepts certain additions with the belief that what was offered would be accepted with the condition and that the offer should be accepted either fully or rejected, which cannot be sustained. The Tribunal in fact held that there should be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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