JUDGEMENT
Dipak Kumar Sen, J. -
(1.)The material facts on record as found and admitted are, inter alia, that Sethi Pen Stores, a partnership firm, the assessee, proposed to enter into a settlement with the Income-tax Department and applied before the Commissioner of Income-tax, West Bengal-II, on January 25, 1968, offering for taxation a sum of Rs. 79,500 which according to them represented genuine hundi loans but could not b6 supported by evidence; It was proposed to spread over the said amount for the accounting years 1962, 1963, 1964 and 1965.
(2.)An order was passed on the said application by the Commissioner of Income-tax on December 29, 1970, as follows:
"1. The peak amount of the alleged hundi loans amounting to Rs. 1,15,000 shall be assessable in the following assessment years :
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Interest debited in the books of accounts on these loans shall be disallowed in the respective assessment years. Penalty equivalent to 20% of the tax sought to be evaded shall be imposed in respect of the amounts mentioned above as well as interest to be disallowed in the respective assessment years. The tax and the penalty payable in respect of the assessment year 1960-61 shall be paid by the assessee by way of additional penalty for the assessment year 1961-62, as the assessment for the year 1960-61 is not open....... The aforesaid income now proposed to be brought to tax shall be treated as earned income. The assessee shall be allowed to introduce in its books of accounts 50% of the disclosed amount (50% of Rs. 1,15,000 = Rs. 57,500) or an amount equivalent to the tax and penalty liabilities arising as a result of this settlement, whichever is higher."
(3.)Pursuant to the aforesaid, further assessments were made on the assessee for the said assessment years 1961-62 to 1965-66 and tax and penalty were levied. In the assessment year 1972-73, the accounting year ending on December 31, 1971, the assessee in terms of the settlement introduced in its accounts a sum of Rs. 1,13,471, half of the said amount, namely, Rs. 56,735.50, being credited to each of the partners.
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