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TaxTMI 
TaxTMI 
TaxTMI 
1992 (9) TMI 152
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....ests of the revenue inasmuch as the Assessing Officer has not looked into the various credits appearing in the names and passed an order in a routine fashion. He, therefore, set aside the assessment order on 29-3-1983 for being made afresh after investigation on the nature of advances and deposits from the customers and after verifying their genuineness. Similarly, the assessment for the assessment year 1978-79 was set aside by the CIT(A) on 7-12-1982 with a direction to the Assessing Officer to pass the fresh order keeping in view his directions contained in the order. In the detailed order under section 263 for the assessment year 1977-78 passed on 29-3-1982, the CIT observed that while the assessee had received the advances from the purchasers, the Assessing Officer did not look into the nature of the same. According to the assessee, the advances raised by the firm were returned to the concerned parties. The refund of these deposits were either made in cash or by bearer cheques. It was found that out of 17 cheques issued, 4 cheques were signed by one Shri Sharma and two cheques were encashed by one person. When the CIT went through the record, he found that the Assessing Officer....
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....---------------------------------------------------------------------------------------------------------- Rs. Rs. Rs. 74-75 2,74,450 3,54,750 80,000 75-76 2,92,320 3,02,320 10,000 76-77 3,82,650 6,42,650 2,60,000 77-78 4,76,770 5,96,760 1,20,000 78-79 3,65,450 4,75,450 1,10,000 79-80 2,05,510 2,65,510 60,000 --------------------------------------------------------------------------------------------------------------------------------------------------- The Assessing Officer regularised the revised returns by issue of notices under section 148. The contents of the paper book pages 110-111 show the position of income originally assessed, income as per revised returns, additional income voluntarily offered for taxation and total income. The Assessing Officer completed the assessments for the assessment years 1974-75 to 1979-80 on the same day, that is to say, on 20th of May, 1983. All the orders are passed under section 143(3)/147(a). All of them are small orders. The Assessing Officer completed the assessments by starting with the income finally assessed originally and added to the same the undisclosed income offered for assessment for different years. The undisclosed inco....
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....the concealment of income was detected by the department before the assessee made a petition under section 273A and offered certain amounts of additional income to be included in the total income. He accordingly imposed a penalty of Rs. 95,750 under section 271(1)(c) of the Act which is the minimum imposable penalty for the assessment year 1974-75. More or less similar findings have been given for the assessment years 1975-76 to 1979-80 except that for the assessment years 1976-77 to 1979-80, Explanation 1 to section 271(1)(c) of the Act has also been applied by the Assessing Officer. In all the orders, the penalties of different amounts, namely, Rs. 26,120, Rs. 2,00,200, Rs. 79,200, Rs. 1,02,687 and Rs. 58,567 have been imposed for the years 1975-76 to 1979-80 respectively. 6. The assessee filed the appeals before the CIT(A) who held that the assessee filed the revised returns only after it became aware that the Assessing Officer had detected the concealment of income in the course of the assessment proceedings for the assessment year 1978-79. He held that the assessee had earned the income which was not included by it in the original returns and this fact was within his knowledg....
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....e income earlier disclosed. From 7-12-1982 to 28-2-1983 no attempt was made by the Assessing Officer to make any investigation or enquiries of the nature directed by the CIT(A). (E) For the assessment year 1979-80 the CIT(A) by his order dated 20th August, 1987 dismissed the appeal on the ground that in view of the petition under section 273A filing a revised return, the appeal had to be dismissed. (F) Though the CIT(A) had set aside the order for the assessment year 1978-79 on 7-12-1982 and though the same was pending for disposal, on 28-3-1983, the Assessing Officer issued another notice on 28-3-1983, for the said year. The reasons for issuing the said notice when the assessment was already pending before him has nowhere been placed on the record. 8. The Counsel for the assessee submitted that for the assessment years 1974-75, 1975-76 and 1976-77, the Assessing Officer did not take any action till 28-3-1983 when he issued notices under section 148 to regularise the returns filed by the assessee for the said years on 28-2-1983. It was submitted that the Assessing Officer had no material on record to hold that the assessee had concealed the particulars of any income or had furni....
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....ts were additionally offered for taxation by the assessee were not found out by the department but were disclosed by the assessee with a view to avoid harassment in future and to buy the peace from the department. It was submitted that similar was the position for the assessment years 1975-76 and 1977-78. 9. Our attention was invited to para 4 of the order under section 271(1)(c) for the assessment year 1974-75 and it was submitted that though the Assessing Officer had mentioned that the past history of this case clearly established the facts that before the assessee offered additional income for assessment for the assessment years 1974-75 to 1979-80, the concealment of income was detected by the department, there is no material on record to prove that the Assessing Officer had found out any thing specific at least for the assessment years 1974-75, 1975-76 and 1976-77. It was also submitted that the observation of the Assessing Officer that it was due to the detection of the concealment that the department had determined to reopen the assessments for the years 1974-75 to 1976-77 on the basis of the direction given by the CIT(A) is also not correct as the order of the CIT(A) was pa....
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....rding the assessment year 1978-79, it was further submitted that though the CIT had set aside the order, the Assessing Officer failed to make any enquiry as per the direction of the CIT and, therefore, the finding that there was material on record to hold that the assessee concealed the particulars of any credit is not correct. For the year 1978-79, it was submitted that the CIT(A) had himself given a finding that the Assessing Officer had not looked into any material required as per law. Regarding the assessment year 1979-80, it was submitted that the CIT(A) had dismissed the assessee's appeal on the ground that as the income has been disclosed by the assessee under section 273A made that appeal as infructuous. 10. Our attention was invited to the decision of the Supreme Court in the case of Sir Shadilal Sugar & General Mills Ltd. v. CIT [1987] 168 ITR 705. It was submitted that the assessee when he filed the petition under section 273A before the CIT(A) had only accepted certain amounts to be added to the total income and he had clearly stated that it was subject to plea that no penalty was to be imposed. It was submitted that the assessee had at no stage had accepted that it ha....
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....alties deserve to be cancelled. 11. The Departmental Representative invited out attention to the commentary of the learned Authors S/Shri Kanga and Palkhivala on Income-tax, 8th Edition, Vol. I, page 1636 and it was submitted that each case must depend upon its own circumstances. It was also submitted that the evidence which is discovered or comes into existence after the assessment is completed can be taken into account in the penalty proceedings --- CIT v . Babu Ram Chander Bhan [1973] 90 ITR 230 (All.).The findings given in the assessment order would be relevant and admissible materials in penalty proceedings. It was, therefore, submitted that the Assessing Officer while completing the assessment for the assessment year 1978-79 was on the track of the assessee's activity and when the CIT(A) set aside the assessment for the year on 7-12-1982, the assessee decided to offer the income for different years so that the department could not proceed to look into the materials in detail. It was submitted that the assessee would not have made any additional disclosure but for the fact that the department was regularly pursuing the assessee. Our attention was also invited to the notice un....
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....sideration the various aspects of the case, dismissed the assessee's petition under section 273A. It was submitted that the CIT had given a clear finding that the department had already detected the concealment of over Rs. 3,47,000 and the CIT(A) as well as the CIT had set aside the relevant assessment order with the clear direction to consider the additions in the earlier year. It was submitted that filing of the revised returns merely amounted to admitting the facts which had already been discovered by the department. The assessee only agreed to certain quantification of assessment year-wise as against the total detected by the department. It was, therefore, submitted that the assessee had concealed the particulars of his income. 13. The Departmental Representative proceeded to invite our attention to the following decisions of the ITAT Nagpur Bench, Nagpur. (i) In the case of ITO v. Dhanpatrai Badridas Malhotra IT Appeal Nos. 525 to 529/Nag./1986 dated 13-8-1990 (assessment years 1978-79 to 1982-83). (ii) In the case of R. D. Patel & Co. v. ITO IT Appeal No. 450/Nag./1985 dated 20-6-1989 for the assessment year 1978-79. It was submitted that both the decisions were delivered....
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....ssing Officer wanted to look into the materials in detail and pass fresh order, the original orders of the Assessing Officer for the assessment years 1977-78 and 1978-79 do not indicate any finding of fact which could depict anything else except saying that the department was making enquiries. It was submitted that when the assessee realised that its accounts were not properly maintained and that it would be very difficult for him to contact the parties at a late stage, the assessee decided to buy peace from the department as the business was on full swing. It was submitted that the assessee wanted to concentrate on business by paying some tax instead of having a long battle with the department. He proceeded to invite our attention to the decision of the Kerala High Court in the case of CIT v. Pawan Kumar Dalmia [1987] 168 ITR 1. Regarding the ITAT, Nagpur Bench's decisions, it was submitted that the facts are clearly different. The decision of the Supreme Court in Sir Shadilal Sugar & General Mills Ltd.'s case was not taken into consideration. 15. We are of the opinion that the CIT(A) was not justified in confirming the penalties imposed by the Assessing Officer. A penalty under ....
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....ng such proceedings though it is pertinent to note that the CIT(A) for the assessment year 1978-79 and the CIT for the assessment year 1977-78 had set aside the assessment with definite direction to the Assessing Officer to look into the materials and to pass fresh orders. The direction of the CIT can never constitute material for imposition of penalty. If the directions were carried out by the Assessing Officer and if during the course of making enquiries as per the directions of the CIT, some concealment may have been found, then the Assessing Officer would have been justified in imposition of the penalties. In such case, the quantum of addition made to the total income would have been found out by the Assessing Officer and not only offered by the assessee. The decision of the Supreme Court in Sir Shadilal Sugar & General Mills Ltd.'s case is clear on this aspect. We find that the orders of the ITAT, Nagpur Bench, Nagpur relied upon by the departmental representative have not shown any consideration for that case. If an assessee is caught having concealed particulars of income and then makes an offer for being assessed on that income, then he cannot escape any penalty. But if no ....
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....ses cannot be taken into consideration as jurisdictional High Court has given a final word on this issue. We are of the opinion that though the department was in the process of making enquiries but as the orders of the CIT and CIT(A) for the assessment years 1977-78 and 1978-79 shows that the department was still on fishing expedition and had not been able to catch any fish. The department proceeded to make enquiries earlier but did nothing to carry out the directions of the CIT and CIT(A) for 1977-78 and 1978-79. The department has merely relied upon the petition of the assessee under section 273A to impose the penalties. We are unable to agree with the CIT(A) that in this case, the assessee very well knew that he had concealed the particulars of income and had knowledge of such concealment. Neither the orders of the Assessing Officer under section 271(1)(c) nor the order of the CIT(A) reveal that any of the credits were in fact bogus credits. If the Assessing Officer had proceeded to investigate the matter on the lines suggested by the CIT and the CIT (Appeals) and if during the process of investigations and enquiries he had established that the claims made by the assessee were f....