- (1.) HEARD counsel for the parties.
(2.) THE petitioner seeks quashing of impugned order dated September 17, 1991, passed by the Commissioner-respondent No. 1 under Sections 273A(1) and 273A(4) of the Income-tax Act, 1961 (briefly, "the Act"). THE facts, as briefly stated, are that during the course of assessment proceedings relating to the assessment year 1985-86, a notice was issued to the assessee under Section 143(2) of the Act on November 26, 1987, calling upon it to explain liabilities worth Rs. 9,78,835. After issue of the notice, the assessee filed a revised return for the assessment year 1984-85 on January 18, 1988, surrendering liabilities worth Rs. 8,66,325. Liabilities of Rs. 9,78,835 appeared in the following names : JUDGEMENT_522_ITR229_1998Html1.htm The position of the accounts of the aforesaid parties in the assessee's books was reflected as under : JUDGEMENT_522_ITR229_1998Html2.htm The Assessing Officer in the assessment order relevant to the assessment year 1985-86 observed that the payments to the above parties were shown in cash instalments of Rs. 2,500 in the subsequent years but the purchase bills issued by the parties were cash bills. The Assessing Officer further observed : ". . . This lead me to suspect the genuineness of liabilities shown in the names of the above parties. The assessee was, therefore, required, vide order sheet entry dated November 26, 1987, to prove the purchases of coal from the above parties. The assessee was also required to file confirmatory letters from them regarding liabilities shown in their names in the balance-sheet."
(3.) PENALTY proceedings under Section 271(1)(c) of the Act were initiated for having concealed the particulars of income and for having furnished inaccurate particulars of the same by the assessing authority. In the penalty order, the Assistant Commissioner of Income-tax, i.e., the Assessing Officer observed as under : ". . . Therefore, vide order sheet entry dated November 26, 1987, the assessee was required to prove the genuineness of the above purchases and to file confirmatory letters from the parties. Thus, when the assessee was cornered on this, it surrendered the liabilities of Rs. 8,64,325 and Rs. 1,14,516 for the assessment years 1984-85 and 1985-86, respectively, by filing revised returns on January 15, 1988, and admitted the same as bogus liabilities shown in the balance-sheet as the payments to coal dealers were made earlier in the assessment year 1984-85 out of books . . ." This is how the Assessing Officer imposed the penalty to the extent of Rs. 6,00,000 for the assessment year 1984-85 and to the extent of Rs. 75,000 for the assessment year 1985-86 under Section 271(1)(c) and of Rs. 20,000 under Section 273(2)(c) of the Act. Thereafter, the petitioner approached the Commissioner under Section 273A, Sub-section (1) and Sub-section (4), of the Act for waiver of penalties.;