Waiver Of Interest / Penalty

M/s Mahajan Iron Stores Loha Mandi, Batala 
F No 1/1/65/80-IT

ITSC Delhi
Order dated 26.2.86

The applicant firm in this case was a dealer in iron goods. In SOF the assessee had stated that the books of account were not properly maintained. As observed by the Commission, it was a peculiar case, where the assessee itself had advocated rejection of books of accounts. Income was computed after taking into consideration the totality of facts and circumstances. Additional income for the two assessment years in question was determined at Rs 1 lakh after taking into consideration that the peak credit was of Rs 77,752/- on 17.3.1979 and there was a pending debit balance of Rs 19,757/- on 31.3.1978.......

The income of the assessee for the two assessment years was spread over both the years. For the second assessment year, the allocation of additional income between the two periods involved in that year, had been made on time basis.

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Shri Nandlal Khullar, S/o Shri Khairati Ram Khullar, Batala 
F No 1/1/148/82-IT & 1/1/219/83/IT

ITSC Delhi
Order dated 10.7.87

In this case settlement application was admitted for asssessment years 1981-82, 1982-83 and 1983-84. The assessee carried on pawn-broking and sarafi business in Batala. The assessee had requested for re-opening of his case for the assessment year 1973-74 to 1980-81 u/s 245E as amended by the Finance Act, 1987. This request of the applicant was accepted. Net increase in the assets of the assessee, as pertaining to the period relevant for the assessment years 1973-74 to 1983-84 was worked out at Rs 17,87,000/-. This income was allocated in various assessment years after taking into consideration the factors like average rate of earning at 24% of the capital, estimated house-hold expenses and the fact that the whole amount of capital may not have been invested in money lending business throughout.

"The assessments for the assessment years 1973-74 to 1980-81 had been re-opened u/s 245E. As such, penalties u/s 271(1)(a) and 273 and interest u/s 139(8) and 215/217 even, if exigible, are waived for these years. The returns for the assessment years 1981-82, 1982-83 and 1983-84 were late by 16 days, 33 months and 21 months respectively. The return for the first year was nominally late and for the other two years the assesssee's explanation that the returns were filed late because of the fact that all the documents had been seized by the Income tax Department on 8.9.1982 and immediately thereafter, the assessee became busy in the preparation of the settlement application which was filed on 22.12.1982, is accepted as reasonable. The entire pawned jewellery was seized by the Department practically incapacitating the assessee from carrying on his business. Considering these facts, penalties leviable u/s 271(1)(a) and 273 and also interest chargeable u/s 139(8) and 215/217 are waived for these three years. As for the penalty u/s 271(1)(c), there is no doubt that there is substantial variation in the income surrendered by the assessee as compared to that finally determined by us. However, the settlement was expeditiously made because of the cooperation extended by the assessees by readily accepting the mistakes pointed out to him giving up claims which though genuine according to him, were not deductible according to legal provisions applicable. In this regard special mention needs to be made of the assessee's claim on account of loans amounting to Rs 1,60,620/- representing 60% of Rs 26,77,000/- worked out on the basis of entries in the LIC diary. In view of this, we waive penalty u/s 271(1)(c) for all the assessment years. As the assessee had cooperated during the course of proceedings before us and readily offered for assessment the unexplained decrease in his investments which were worked out in consultation with his counsel, we grant him immunity from prosecution under the Income tax Act, Indian Penal Code and also Gold Control Act with respect to the case covered by this settlement ".

(For Interest u/s 220(2) please refer to M/s Damani Brothers)

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