TaxTMI 
TaxTMI 
2011 (6) TMI 17
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the premises of the appellant/Shri Rajiv Bhatia, Director of the assessee company and certain documents were seized, including annexures A-2, A-3 and A-10. Notice under Section 158BC of the Act for the block period i.e., assessment year 1991-1992 to 2001-02 was issued against the assessee company which filed its block return. Assessing Officer completed the assessment under Section 158 BC and inter alia made addition of Rs.14,77,410/- for the following reasons. A total of annexures A-2 was Rs.28,76,071/- and that of A-3 Rs.22,73,571/-. A total of both these make it to Rs.51,49,642/-. As against this amount, entries relating to claim of the assessee for a sum of Rs.30,69,868/-, being repeat/duplicate, was accepted and thereby making a balance of Rs.20,79,773.50 against annexures A-2 and A-3. In this regard, the assessee also stated that a sum of Rs.9,59,941/- was already found recorded in the books of account of the assessee, which was accepted by the Assessing Officer. Thus, the amount of Rs.11,19,832.50 (2079773 - 959941) was taken as remaining unexplained by the assessee. In this regard, explanation was also given by the assessee that this was spent by the Director of the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sion of truth carries much weightage. The theory of imprest account appears to be clearly an after-thought. There was nothing to prevent Shri Bhatia from stating the truth in case he was withdrawing certain amount in his imprest account and later on spending the same on the construction. The addition of Rs.11,19,832/- and Rs.3,57,577/- are therefore confirmed." 5. Both, i.e., assessee as also the Revenue, being aggrieved by the order of the CIT(A), filed their respective appeals before the Tribunal, on various issues including addition of Rs.1477410/-. The Tribunal vide its order dated 16th September, 2005 disposed of both the appeals together and thereby deleted all the additions excepting the addition of Rs.1477410. In this regard the Tribunal reasoned as under: "We shall first explain as to what an Imprest account is. It is an adhoc sum entrusted to someone with authority to spend for purposes authorised by the person giving the fraud. It is a matter of convenience that the person to whom such a fund is given is not handicapped by non-availability of funds even for routine or small expenditure. The persons to whom such fund is given has to account for the expense....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be a reason to leavy penalty. The Assessing Officer rejected the pleas of the assessee and maintained the penalty. Against this, matter was carried in appeal before the CIT(A), wherein specific plea was taken with respect to the non-recording of satisfaction in the block assessment order regarding leavy of penalty and it was contended that in the absence of such satisfaction, the penalty proceedings were bad. 7. The CIT(A) recorded the finding that satisfaction, as required in Section 27(1)(c), is not envisaged in Section 158BFA(2). While recording findings against the assessee in this regard, the CIT(A), on merits held that the Assessing Officer was not justified in levying penalty merely on the ground that additions have been upheld by the ITAT. The Revenue, being aggrieved of the final outcome of the order of the CIT(A), preferred appeal before the Tribunal. Assessee brought the additional fact on record that the income tax authorities have accepted set off with regard to the expenditure in the assessment year 2004-05. In support thereof, assessment order for the financial year 2003-04 was also furnished. While entertaining this plea, the Tribunal held that this also do....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cer in this regard before proceedings to levy any penalty under Section 27(1)(c). Learned counsel relied upon various judgments in support of his submissions. A reference can be made to those, viz., Dilip N. Shroff v. JCIT, (2007) 291 ITR 519 (SC); Union of India v. Dharamendra Textile Processors, (2008) 306 ITR 277 (SC); CIT v. Reliance Petroprdoucts Pvt. Ltd., (2010) 322 ITR 158 (SC); CIT v. Haryana Warehousing Corporation, (2009) 314 ITR 215 (PandH); CIT v. Sidhartha Enterprises, (2010) 322 ITR 80 (PandH); Ms.Madhushree Gupta v. Union of India, (2009) 317 ITR 107 (Delhi), CIT v. Nath Bros. Exim International Ltd., (2007) 288 ITR 670 (Delhi) and CIT v. Bacardi Martini India Ltd., (2007) 288 ITR 585 (Delhi). 11. The crux of the ratio of above decisions is that a mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi. In order to be covered within the proviso of clause (c) of sub-Section (1) of Section 271, there has to be concealment of particulars of income by the assessee or the assessee must have furnished inaccurate particulars of income. Incorrect claim may not amount to furnishing of inaccurate particulars. Everything ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sing Officer. (iv) the order imposing penalty can be passed only after assessment proceedings are complete. At the stage of initiation of penalty proceedings the order passed by the Assessing Officer need not reflect satisfaction vis-à-vis each and every item of addition or disallowance if the overall sense gathered from the order is that a further prognosis is called for. The interrelation of additions or disallowances, if any, may be unreavelled only at the conclusion of the penalty proceedings. It would be sufficient compliance with the law that there is prima facie evidence of concealment of particulars of income or furnishing inaccurate particulars of income. This is so as the Legislature does not enjoin a full fledged investigation at the stage of initiation of penalty proceedings. By a deeming fiction in Section 271(1B) inserted in the Income-tax Act, 1961 by the Finance Act, 2008 with retrospective effect from April 1, 1989, where any amount is added or disallowed in computing the total income or loss of an assessee in any order of assessment or reassessment and if such order contains a direction for initiation of penalty proceedings under sub-Section (1), such an or....