P.K. Tare, C.J.
1. This order shall also govern the disposal of misc.Civil Case No. 492 of 1973 (Addl. Commissioner oj Income-tax v. Kanhaiyalal Jessaram).
2. This is a petition by the department under Section 256(2) of theIncome-tax Act, 1961, requesting that the Income-tax Appellate Tribunal,Indore Bench, Indore, be required to refer the following questions for theopinion of this court:
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the admission made by the assessee in his application under Section 271(4A) to the effect that the value of the assets held in the name of his son may be added to his own income, will not be binding on the assessee in the event of there being no settlement of his income, as requested for by him ?
(2) Whether the Tribunal was justified in excluding the income earned by the assessee in the name of his son in spite of the assessee's admission that his son was his benamidar ?
(3) Whether the Tribunal was justified in holding that there was no material on record to prove that the assessee's son was a benamidar, particularly when the admission of the assessee that his son was his benamidar, was on record ?
(4) Whether the finding of the Appellate Tribunal could be reasonably arrived at on the material considered by it ?'
3. In the present case, i.e., M.C.C. No. 491 of 1973, the assessment year was 1965-66, for which the accounting period ended on March 31, 1965. The respondent filed a return of his income showing the same at Rs. 15,000. The respondent had not maintained nor filed purchase invoices. The Income-tax Officer from information received from different parties and the inquiries made by him from the sales tax authorities, estimated the sales at Rs. 15,00,000 and applied a net profit at the rate of 5%. The Income-tax Officer further clubbed the sum of Rs. 15,750, which was the income of his major son, Darshanlal, relying on his finding in the assessment order for the year 1963-64.
4. The respondent filed an appeal before the Appellate Assistant Commissioner, who reduced the turnover to Rs. 12,00,000 and the rate of profit was fixed at 3%. As regards the clubbing of income of Darshanlal, it was held that reliance on the statement (or the so-called admission) of the respondent in an application under Section 271(4A) for settlement was neither relevant nor sufficient. The amount of Rs. 15,750, which was the income of the respondent's son, Darshanlal, was, therefore, deleted. The department filed an appeal before the Appellate Tribunal and the learned Members of the Appellate Tribunal held that any admission made by the assessee in his application for settlement under Section 271(4A) of the Income-tax Act, 1961, could not be held binding on the assessee if his proposal for settlement was not accepted by the department. If the respondent's assessment was on merits, it was incumbent on the department to have furnished the requisite material showing that his son, Darshanlal, was his benamidar and any admission made in the offer by way of an application for settlement under Section 271(4A) could not be considered if the offer was not accepted by the department. The department made an application to the Appellate Tribunal under Section 256(1) of the Act, which was rejected.
5. Misc. Civil Case No. 492 of 1973 involves the same question and it relates to the assessment year 1966-67, for which the accounting period ended on March 31, 1966. The income of Darshanlal concerned in that case was Rs. 19,614, which was included by the Income-tax Officer, but was excluded by the Appellate Assistant Commissioner and the Appellate Tribunal. The department made an application under Section 256(1) for referring the very same questions for the opinion of this court and that application having been rejected, this court is moved under Section 256(2) of the Act.
6. Section 271(4A) of the Act is as under :
'(4A) Notwithstanding anything contained in Clause (i) or Clause (iii) of Sub-section (1), the Commissioner may, in his discretion-
(i) reduce or waive the amount of minimum penalty imposable on a person under Clause (i) of Sub-section (1) for failure, without reasonable cause, to furnish the return of total income which such person was required to furnish under Sub-section (1) of Section 139, or
(ii) reduce or waive the amount of minimum penalty imposable on a person under Clause (iii) of Sub-section (1), if he is satisfied that such person-
(a) in the case referred to in Clause (i) of this sub-section has, prior to the issue of notice to him under Sub-section (2) of Section 139, voluntarily and in good faith, made full disclosure of his income; and in the case referred to in Clause (ii) of this sub-section has, prior to the detection by the Income-tax Officer, of the concealment of particulars of income in respect of which the penalty is imposable, or of the inaccuracy of particulars furnished in respect of such income, voluntarily and in good faith, made full and true disclosure of such particulars;
(b) has co-operated in any enquiry relating to the assessment of such income; and
(c) has either paid or made satisfactory arrangements for payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year :
Provided that if in a case the minimum penalty imposable under Clause (i) or, as the case may be, Clause (iii) of Sub-section (1) in respect of the relevant assessment year, or where such disclosure relates to more than one assessment year, the aggregate of the minimum penalty imposable in respect of those years, exceeds a sum of rupees fifty thousand, no order reducing or waiving the penalty shall be made by the Commissioner unless the previous approval of the Board has been obtained. (4B) An order under Sub-section (4A) shall be final and shall not be called in question before any court of law or any other authority.'
7. It is clear that this provision is made to persuade the evaders of tax to make full disclosure of income voluntarily and in good faith. In that case the Commissioner has been empowered to reduce or waive the amount of minimum penalty. The entire offer and acceptance has to be considered as one part and what the department tried to do was to dissect the offer and acceptance and to treat the so-called admission made in the offer binding on the assessee. Although the offer may not be accepted by the department, we would not permit such dissection of the offer and acceptance which, in our opinion, would go together. If the offer is not accepted and if the department insists on deciding the assessment case on merits, any facts said to be disclosed in such offer have altogether to be excluded and then it becomes incumbent on the department to resort to the usual assessment or the best judgment assessment, as the case may be, and in that event the department would be empowered to impose the minimum penalty imposable under the section. The attempt of the department was on the lines 'heads I win tails you lose'. Such an interpretation of Section 271(4A) of the Act can evidently not be permitted and we feel that the Appellate Assistant Commissioner and the Appellate Tribunal were correct in holding that in the event of there being no settlement, the disclosures made in the offer ought to be excluded from consideration altogether. If the department's contention were to be accepted, it would defeat the very purpose of enacting Section 271(4A) of the Act. We may observe that unless the offer is accepted and acted upon by the department, the other sub-sections of Section 271 will be attracted in the matter of imposition of penalty and the two provisions cannot be allowed to be mixed up to the entire advantage of the department and disadvantage of an assessee. We, therefore, do not think that the present case is one in which we should call upon the Appellate Tribunal to refer any question to us, as we are fully satisfied that even though the main question posed might be one of law, there can be no other interpretation except the one put by the Appellate Assistant Commissioner and the Appellate Tribunal.
8. As a result, these petitions fail and are dismissed summarily without notice to the other side.