Law: Income Tax Ordinance, 1979

Section: 111,116,117,118

(a) Income tax Ordinance (XXXI of 1979)--Ss. 111, 116, 117 & 118 Assessment Assessee having two business dealings i.e. hardware good and cement dealings Assessee concealing his source of income with regard to cement dealings in original as well as in revised returns Income tax Officer, instead of processing normal assessment by applying usual G. P. rate after allowing reasonable expenses negotiating and compromising with assessee on assessment of income subsequently declared by him ¬Order of reassessment and demand notice served on assessee, held, made situation fairly doubtful Conduct of Income tax Officer was giving impression that assessee was being lulled in a trap ¬Assessee in reply to notice under Ss. 116, 117 & 118 immediately becoming apologetic and due to fear of prosecution, requesting for compromise of alleged offence by imposition of nominal composition fee income tax officer thus becoming one of parties to an agreed assessment and opting to cut short matter of detailed scrutiny by entering into compromise and agreeing with assessee for assessment at net income Held: Income tax Officer could not blow hot and cold in some breath by making agreed assessment as well as by resorting to peal provisions of Ordinance-Initiation of penal provision of Ordinance Initiation of penal provision being dis-cretionary provision with Income tax Officer, he would be deemed to have waived his discretion of initiation of penal provision when he compromised with assessee in an agreed assessment When an assessee makes a compromise he gets an impression that he will not be further harassed in matter by resorting to penal provisions¬-Income tax Officer was supposed to make it clear to assessee that agreed income was subject to penal provisions of Ordinance as object of law is neither to harass an assessee nor to lull him into a trap When assessee came out with honest intention of making compromise for agreed assessment from income of cement dealing and Income tax Officer ordered accordingly, neither any penalty nor any prosecution was therefore warranted thereafter Interference declined by tribunal on appeal by Department against order of Assistant Appellate…

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