TMI Blog1998 (6) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... of this undertaking, the assessee filed the revised return on 30th March, 1989 declaring additional income of Rs. 1.5 lakhs. The assessment was completed on 31st March, 1989 on the total income of Rs. 2,31,039. The perusal of the order shows that a sum of Rs. 14,288 was also assessed with reference to certain discrepancies pertaining to the financial year 1988-89 relevant to assessment year 1989-90. This assessment was accepted by the assessee. 3. However, in the course of assessment proceedings, the penalty proceedings under section 271(1)(c) was initiated by the Assessing Officer. In response to the show-cause notice, the assessee vide his letter dated 7th August, 1990 stated the circumstances under which the undertaking was given by the assessee. According to the assessee, the undertaking was given at the advice and assurance of the officers conducting survey to the effect that no penalty would be imposed if the amount of Rs. 1.5 lakhs was offered by the assessee for assessment year 1988-89. It was also pointed out that no specific discrepancy had been found in the course of survey pertaining to assessment year 1988-89. Hence, it was prayed that penalty proceeding should be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration. He drew our attention to the assessment order to show that discrepancies related to only four transactions as mentioned in the assessment order and these pertain to the financial year 1988-89 relevant to assessment year 1989-90 with which we are not concerned. Despite the fact, the same has been added as income of the assessment year 1988-89. 3. Despite the fact that there was no discrepancy pertaining to assessment year 1988-89, the survey officers persuaded the assessee to offer additional income of Rs. 1.5 lakhs for Assessment Year 1988-89 and given assurance that no penalty would be imposed if such undertaking was given. It is in these circumstances that undertaking was given. In these circumstances, the penalty proceedings should not have been initiated by the Assessing Officer. Merely, the assessee had agreed for the addition, the same should not amount to concealment of the income for Assessment Year 1988-89. 4. The affidavit filed by the assessee has not been rebutted by the department and therefore, in view of the Supreme Court decision in the case of Mehta Parikh Co. v. CIT [1956] 30 ITR 181, the contents of the affidavit should be accepted. It was further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it was subject to no penal action. Once the surrender was made by the assessee, it does not lie in the mouth of the assessee to say that income did not belong to Assessing Year 1988-89. Regarding the legal contention of the assessee's counsel that assessment was bad, it was contended by him that after the assessment is completed under section 143(1), the Assessing Officer was legally entitled to re-open the assessment under section 143(2)(b) after the approval of DCIT. In the present case, the assessment had been made under the aforesaid section after getting the approval of the DCIT. Therefore, the assessment is valid. Regarding the Bombay High Court decision, he submitted that the same is distinguishable on facts of the case. In support of his contention, he has relied on various decisions namely:---- Western Automobiles (India) v. CIT [1978] 112 ITR 1048 (Bom.), Durga Timber Works v. CIT [1971] 79 ITR 63 (Delhi), Mahavir Metal Works v. CIT [1973] 92 ITR 513 (Punj. Har.), CIT v. P.B. Shah Co. (P.) Ltd [1978] 113 ITR 587 (Cal.), India Sea Foods v. CIT [1978] 114 ITR 124 (Ker) CIT v. Krishna Co. [1979] 120 ITR 144 (Mad.), and CIT v. Warasat Hussain [1988] 171 ITR 405 (P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee to file the revised return by surrendering 1.5 lakhs. It is to be noted that the said undertaking to offer additional income was given on the very date of survey. At the time of survey, the assistant of the Chartered Accountant was not available to the assessee. It is the common practice that the survey party is always interested in collecting the text at the earliest. Hence, it might have persuaded the assessee to give undertaking for surrendering Rs. 1.5 lakhs for Assessment Year 1988-89. If left to the assessee, it would not have given such undertaking without consulting its counsel particularly when there was no material pertaining to Assessment Year 1988-89. 10. At this point, it is pertinent to note about the letters written by the assessee to the Assessing Officer in the course of penalty proceedings. The letter dated 7th August, 1990 which is the first letter states that assessee was assured that no penalty would be imposed if return was revised for Assessment Year 1988-89. An affidavit sworn by Shri Ghisulal Joharmal Solanki, partner of the assessee firm dated 29th October, 1990 stating all the facts of the case was filed by the assessee before the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the advice and assurance of the officers conducting survey to the effect that no penalty would be imposed if such sum was offered for Assessment Year 1988-89. The names of the officers who gave such assurance were also given in the affidavit. This affidavit is not a mere self serving document as contended by the learned Senior DR. The stand of the assessee could be rebutted by Assessing Officer by making necessary enquiry from the concerned officers. If Assessing Officer had not performed his duty properly, then, the stand of the assessee has to be believed. Besides, the survey was also conducted by the same officers at the premises of its sister concern M/s. Solanki Jewellers on the same date. Identical undertaking was given by the partners of that firm. We have seen the said undertaking which is identical to the undertaking in the present case. But, in that case, no penalty preceding was initiated. This fact also supports the case of the assessee. The conduct of the Assessing Officer to persuade the assessee to agree for addition of Rs. 14,288 in respect of discrepancies relating to Assessment Year 1989-90 in the Assessment Year 1988-89 also supports the stand of the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
