TaxTMI 
TaxTMI 
2010 (11) TMI 627
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....d in rejecting the legal precedent that both the additions deleted by CIT(A) and confirmed by Tribunal can be described as change of opinion as held by the Hon'ble Calcutta High Court in the case of CIT vs. Calcutta Credit Corporation (1986) 56 CTR (Cal) 142 : (1987) 166 ITR 29 (Cal). (iii) The learned CIT(A) erred in not recording any finding that there had been any conscious act on the part of the appellant for concealment of income with intention to evade tax. (iv) The learned CIT(A) erred in not considering the fact that the AO had not recorded that the conditions precedent for applicability of Expln. 1 to s. 271(1)(c) are satisfied. (v) The learned CIT(A) erred in not appreciating the fact that the impugned order of penalty suffers from non-applicability of mind; because of the different basis adopted by AO for initiation of penalty and imposition of penalty. (vi) The learned CIT(A) erred in not appreciating the fact that looking to the facts of the case, discretionary jurisdiction is not properly exercised by the AO. Your appellant prays for leave to add, alter and/or amend all or any of the grounds before the final hearing of the appea....
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.... order dt. 29th July, 2005 and addition of Rs. 2,12,494 on account of unexplained jewellery was retained out of an amount of Rs. 3,81,288 on the ground that holding of 300 gms. of gold ornaments by the assessee was reasonable besides miscellaneous jewellery valued at Rs. 10,700. The Tribunal also upheld the addition of Rs. 3,50,000 out of total addition of Rs. 10 lacs, inter alia, on preponderance of probabilities. As a result, the AO observed that undisclosed income of Rs. 7,31,288 was confirmed. 2.2 After receipt of order of the learned CIT(A), in response to a show-cause notice before levy of penalty under s. 271(1)(c) of the Act, the assessee replied that the Tribunal confirmed the addition on account of jewellery without considering certain judicial decisions while addition to the extent of Rs. 3,50,000 was sustained without any basis or any evidence and only on preponderance of probabilities. It was pleaded that when two opinions were possible, no penalty could be levied under s. 271(1)(c) of the Act. Inter alia, the assessee relied on some judicial pronouncements in his support. However, the AO did not accept the submissions of the assessee and imposed a penalty of R....
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....fied as held in the case of Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC). 5.3 I have carefully considered the facts of the case, the submissions of the appellant and the case law relied upon and also the decisions of CIT(A), Tribunal and the penalty order. 5.3.1 A perusal of Hon'ble Tribunal's order reveals that while sustaining part addition on account of gold jewellery it is held by Hon'ble Tribunal that:- '5.1 The very fact that nothing more than affidavits stood furnished even before the learned CIT(A) (after two and a half to three years of the search operation) only goes to show that the assessee, in fact, had no evidence to substantiate his claims, and his admission, vide order-sheet entry dt. 22nd Feb., 1995 (refer para 3.1), stating so, was a true statement. As such, the non-furnishing of the affidavits, as finally adduced before the CIT(A) and before the AO is beyond comprehension. Further, we find most of these affidavits are executed on a single day (i.e., 6th July, 1995), with the assessee's affidavit being on 4th July, 1995, while one in March, 1995 itself i.e., on 9th March, 1995 (or before the passing of the assessment order....
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....ertheless, on a total consideration of facts, including the fact of the assessee's deposition vide statement under s. 132(4), are of the opinion, that the said valuables stand satisfactorily explained as to the source of their acquisition, and the balance, except to the extent that a household of the assessee's financial status may be expected to own, as unexplained. As regards the assessment of the same, we find that the assessee, a goldsmith, declares his annual earning as between Rs. 15,000 to Rs. 20,000 [answer to question No. 4 of statement under s. 132(4) dt. 15th Oct., 1992]. Besides the assessee, his son Shri Jayendra Soni, is the only earning member of the family living together with their respective spouses and the assessee's grandchildren. Under the circumstances, we do not think that the assessee after meeting his maintenance expenditure, i.e., personal, household and other family obligations (the assessee has three married daughters), would be able to effect any savings. He is also, we find, maintaining two properties, viz., residence and shop. Nevertheless, as it is customary to receive gifts, in valuables, on various family festivals, in our society (which, we are al....
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....tion No. 7 it was stated by the appellant as under:- 'Q. 7. Give us the information as to gold and silver ornaments, vessels and FDR investments as stated in question Nos. 4, 5 and 6 above. A. 7. Ornaments described under question 4, as I have already replied, belongs to my customers, silver ornaments referred to in question No. 5 belong to my family, I would like to inform regarding its investments that they represent the accumulated capital of the business of gold and silver, Majuri work which I have been running since last 50 years.' 5.3.6 At para 5.4 of the Tribunal's order it is noted that the appellant was a goldsmith and was declaring annual earning, between Rs. 15,000 to Rs. 20,000 (question No. 4 statement under s. 132(4) dt. 15th Oct., 1992). Regarding the investment in gold jewellery, the Tribunal has found that the appellant's explanation not convincing and valid in view of the appellant's income earning activities, family size and other factors. 5.3.7 In view of foregoing the partly confirmed addition on account of gold jewellery/ornaments and silver is exigible for penalty. 5.3.8 Coming to the addition on account of construction....
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....tiation of penalty proceedings. 6.1 In appeal it is submitted that in the body of the assessment order the AO did not record any satisfaction as warranted by s. 271(1)(c) and that mere direction to issue show-cause notice does not meet the requirement of satisfaction of the AO and thus the penalty proceedings have not been validly initiated. Following case law were mainly relied upon:- (i) CIT vs. Ram Commercial Enterprises Ltd. (2001) 167 CTR (Del) 321; (ii) CIT vs. Rampur Engg. Co. Ltd. and Ors. (2006) 204 CTR (Del) 149; (iii) CIT vs. Suresh Chandra Mittal (2001) 170 CTR (SC) 182. 6.2 I have gone through the contentions of the appellant. The argument of the appellant is that no satisfaction was recorded in the assessment order for initiating the penalty and thus the penalty proceedings had not been validly initiated. Recently in the case of Shyam Biri Works (P) Ltd. vs. CIT (2003) 185 CTR (All) 510 : (2003) 259 ITR 625 (All) a view has been taken that there is no specific requirement of recording satisfaction under s. 271(1) in contrast to the same being provided in s. 148(2) and therefore even if satisfaction is not specifically recorded, ....
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....(P) Ltd. (2010) 230 CTR (SC) 320 : (2010) 36 DTR (SC) 449 : (2010) 322 ITR 158 (SC), New Sorathia Engineering Co. vs. CIT (2006) 202 CTR (Guj) 188 : (2006) 282 ITR 642 (Guj), CIT vs. Lakhdhir Lal Ji (1972) 85 ITR 77 (Guj), Bhartesh Jain vs. ITO (2010) 43 DTR (Del)(Trib) 320 : (2011) 137 TTJ (Del) 200 : (2010) 4 ITR (Trib) 370 (Del) p. 377 and K.C. Builders and Anr. vs. Asstt. CIT (2004) 186 CTR (SC) 721 : (2004) 265 ITR 562 (SC). On the other hand, the learned Departmental Representative supported the findings of the learned CIT(A). 5. We have heard both the parties and gone through the facts of the case as also the aforesaid decisions. We find that the assessee filed return declaring estimated income of Rs. 65,000. The AO imposed penalty under s. 271(1)(c) of the Act on the ground that undisclosed income of Rs. 7,31,288 was confirmed by the Tribunal as against returned income of only Rs. 65,000. In quantum appeal before the learned CIT(A), additions of Rs. 3,81,288 attributable to unexplained jewellery and Rs. 10 lacs towards unaccounted expenses were deleted while the Tribunal upheld these additions to the extent of Rs. 2,12,484 (Rs. 1,76,048 according to the assessee) an....
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....t any person has concealed the particulars of his income or furnished inaccurate particulars of such income. It is well-settled that assessment proceedings and penalty proceedings are separate and distinct and as held by Hon'ble Supreme Court in the case of Anantharam Veerasinghaiah and Co. vs. CIT (1980) 16 CTR (SC) 189 : (1980) 123 ITR 457 (SC); the findings in the assessment proceedings cannot be regarded as conclusive for the purposes of the penalty proceedings. It is, therefore, necessary to reappreciate and reconsider the matter so as to find out as to whether the addition made in the quantum proceedings actually represents the concealment on the part of the assessee as envisaged in s. 271(1)(c) of the Act and whether it is a fit case to impose the penalty by invoking the said provisions. Explanation 1 to s. 271(1)(c) in respect of any fact relating to the computation of total income states that the amount added or disallowed in computing the total income of an assessee shall be deemed to be the income in respect of which particulars have been concealed. This deeming provision for concealment is not absolute one. The presumption under the Expln. 1 is rebuttable and not conclu....
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....tence of bona fide belief that amount is not taxable, does not arise. It goes without saying that any violation of the law or rules relating to economic offences, either relating to the payment of duty or tax as the case may be, the theory of mens rea is not attracted. In such matters, the rules of interpretation contemplate a strict interpretation rather than a liberal and wider interpretation. The breach of civil obligation which attracts a penalty under the provisions of an Act would immediately attract the levy of penalty irrespective of the fact whether the contravention was made by the defaulter with any guilty intention or not, vide Chairman, SEBI vs. Shriram Mutual Fund (2006) 131 Comp Cos 591 (SC) : (2006) 5 SCC 361. This view has been reiterated by the Hon'ble Supreme Court in their decision dt. 29th Sept., 2008 in the case of Union of India and Ors. vs. Dharamendra Textile Processors and Ors., in Civil Appeal Nos. 10289-10303 of 2003, now reported in (2008) 219 CTR (SC) 617 : (2008) 14 DTR (SC) 114 : (2008) 306 ITR 277 (SC). Thus, the plea raised in this ground is not tenable. 5.3 Similarly pleas of recording of satisfaction and exercise of jurisdiction or non-ap....