TaxTMI 
TaxTMI 
2004 (6) TMI 250
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....ial facts for the disposal of this ground of appeal are that according to the AO, the assessee had introduced unaccounted income of Rs. 4,70,000 in the books of accounts as advances received from various brick kiln owners and accordingly, confirmations from some of the brick kiln owners with whom the assessee was having trading dealings, were called. According to the AO, confirmation to the tune of Rs. 1,05,900 was not filed and so the same was treated as unexplained. The assessee then filed revised return on 30th April, 1996 in which the abovesaid amount of Rs. 1,05,900 was shown as surrendered because he could not contact these parties, as detailed in the order of the AO, from whom the assessee received these advances totalling to Rs. 1,0....
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....rn surrendering Rs. 1,05,900 in the revised return to give quietus to the proceedings and tax was paid on the abovesaid amounts. The assessee also contended before the CIT(A) that since this amount has been surrendered by the assessee with a view to avoid further proceedings against the assessee, so it would not lead to any inference that the assessee was guilty of concealment of income. The assessee also contended before the CIT(A) that before levying penalty, clear-cut charge has to be framed against the assessee for concealment of income or for furnishing inaccurate particulars of such income by the AO, whereas no specific charge has been framed against the assessee for which penalty has been levied. So the AO was not justified in levyin....
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....llant and also from the notice of the ITO in which he has not framed any specific charge against the appellant, which is a condition for the levy of penalty and accordingly the penalty levied by the AO both on the facts and on this legal ground are ordered to be cancelled." 2.3 Before us, learned Departmental Representative for the Revenue placing reliance on the reasoning given in the order of the AO, submitted that in this case, the AO by placing reliance on the decision of the apex Court reported in G.C. Agarwal vs. CIT (1991) 95 CTR (SC) 257 : (1990) 186 ITR 571 (SC), has rightly imposed the impugned penalty amount on the assessee because in this case, once the assessee has not been able to produce confirmation from some of the brick....
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....ng that: "The satisfaction as to the assessee having concealed the particulars of his income or furnished inaccurate particulars of such income is to be arrived at by the AO during the course of any proceedings under the Act, which would mean the assessment proceedings, without which, the very jurisdiction to initiate the penalty proceedings is not conferred on the assessing authority by reference to cl. (c) of sub-s. (1) of s. 271 of the IT Act, 1961" Held "Dismissing the application to direct reference, that the Tribunal had found that the assessment order did not record the satisfaction as warranted by s. 271 for initiating proceedings. The Tribunal was justified in cancelling the penalty. No question of law arose from its order....
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....dships observing that the jurisdiction to impose penalty flows from the recording of the satisfaction of the AO regarding concealment of income. In case there is a defect in the assumption of jurisdiction, it cannot be cured." Held "Dismissing the appeal that the reason assigned by the Tribunal for cancellation of the penalty were legally correct and the order passed by it did not give rise to any question of law, much less a substantial question of law." 2.5 We have considered the rival submissions, perused the records and carefully gone through the orders of the tax authorities below. 2.6 In the instant case, we have gone through the entire assessment order passed by the AO and find that during the course of entire assessment ....