By the Court
This reference application at the instance of revenue under section 256(2) of the Income Tax 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 section 271(1)(c) even after giving clear finding that the assessee made a punishable default under section 271(1)(c) ?
2. Whether the Tribunal is justified in cancelling the penalty under section 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 section 271(1)(c) of the Income Tax Act, a penalty of Rs. 19,320 was levied. The Commissioner 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 assurance given by the department to the effect that no penalty shall be levied, if the appeal was withdrawn by the assessee and also the fact that a similar treatment was given to the sister concern, no penalty could be levied.
3. 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 v. CIT . The learned counsel has also placed reliance on a decision of Delhi High Court in Tube Fabrico (I) Ltd. v. CIT : [1994]210ITR1035(Delhi) . Mr. Bhandawat also placed reliance on a decision of Apex Court in Kerala Liquor Corporation v. CIT : [2001]251ITR11(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.
4. On the other hand, Mr. Kothari has placed reliance on a judgment of Division Bench of Punjab and Haryana High Court in CIT v. 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 v. H.M. Lalwani (Decd.) through LRs (2002) 123 Taxman 454 (Raj) to which, one of us was a party (Hon'ble Mr. N.N. Mathur, J.) wherein it is held that penalty under section 140A(3) gives discretion to the assessing officer to inflict or not to inflict penalty.
5. We have considered the rival contentions. The case referred by learned counsel decided by Punjab and Haryana High Court (1997) 143 CTR (P & H) 49 (supra) is more close to the facts of the instant case. A reading of the order of the Tribunal particularly para Nos. 20 and 22 clearly shows that the respondent-assessee agreed for the addition and then withdrew the appeal to buy peace of mind and to avoid litigation on a clear understanding given by the revenue that no penalty would be levied. The said finding is a finding of fact. Thus, in our opinion, no referable question arises. Hence, the reference application is rejected.