- (1.) BY THE COURT : This reference application at the instance of Revenue under S. 256(2) of the IT Act, 1961, has been filed seeking opinion of this Court on the following questions : "1. Whether on the facts and in the circumstances of the case of Tribunal is legally justified in cancelling the penalty under S. 271(1)(c) even after giving clear finding that the assessee made a punishable default under S. 271(1)(c) ? 2. Whether the Tribunal is justified in cancelling the penalty under S. 271(1)(c) on the ground that under similar circumstances no penalty was levied in the case of sister concern ?"
(2.) IN the proceedings under S. 271(1)(c) of the IT Act, a penalty of Rs. 19,320 was levied. The CIT confirmed the penalty. The Tribunal held that out of the total addition of Rs. 29,267, penalty was rightly imposed on Rs. 24,267 but the addition of the balance of Rs. 5,000 did not merit imposition of any penalty. The Tribunal found that on the assurance given by the Department to the effect that no penalty shall be levied, if the appeal was withdrawn by the assessee and also the fact that a similar treatment was given to the sister concern, no penalty could be levied. It is contended by Mr. Sandeep Bhandawat, learned counsel for Revenue, that there cannot be any estoppel against the statute. It is submitted that even in case of admission by the assessee, the question of cancellation of penalty is a question of law. The learned counsel has placed reliance on a Division Bench judgment of this Court in Rasoolji Buxji vs. CIT (1986) 50 CTR (Raj) 215 (1986) 158 ITR 768 (Raj) : TC 55R.336. The learned counsel has also placed reliance on a decision of Delhi High Court in Tube Fabrico (I) Ltd. vs. CIT (1994) 210 ITR 1035 (Del) : TC 50R.930. Mr. Bhandawat also placed reliance on a decision of apex Court in Kerala Liquor Corporation vs. CIT (2001) 170 CTR (SC) 183 : (2001) 251 ITR 11 (SC), wherein the apex Court held that on setting aside the penalty on the ground that the same income assessed as income of another firm, the question whether Tribunal could do so in view of statutory presumptions rests on question of law.
(3.) ON the other hand, Mr. Kothari has placed reliance on a judgment of Division Bench of Punjab & Haryana High Court in CIT vs. Jaswant Rai (1997) 142 CTR (P&H) 49, wherein it is held that the finding of the Tribunal that the assessee agreed to addition to buy peace of mind and to avoid litigation on an understanding and assurance that no penalty would be levied, though the entire amount did not relate to assessment year in question is a finding of fact. The learned counsel has also relied on a judgment of this Court CIT vs. H.M. Lalwani (Decd.) through LRs (2002) 175 CTR (Raj) 280 to which, one of us was a party (Hon'ble Mr. N.N. Mathur, J.) wherein it is held that penalty under S. 140A(3) gives discretion to the AO to inflict or not to inflict penalty .;