TaxTMI 
TaxTMI 
2012 (10) TMI 514
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.... the quantum appeal filed by the assessee, the Tribunal confirmed the addition under Section 461 as under: 1) Inland Flight charges : Rs. 2,00,000/- 2) Addition on the ground that no goods have been received : Rs. 3,70,231/- 3. Addition of difference in rate of Purchase : Rs. 10,38,767/- 4. Excess provision made towards sales tax, added u/s. 43B : Rs. 18,69,787/- ----------------- Rs. 34,78,785/- ---------------- The Tribunal's order dated 21.08.1995 had not been further challenged by the assessee or by the Revenue and hence, the said order had attained finality. As a fallout of the order in the assessment proceedings, the Assessing Authority invoked penalty proceedings under Section 271(1)(c), calling upon the assessee to explain as to why penalty should not be levied for the concealment of income. As far as inland flight charges of Rs.2,00,000/- is concerned, the assessee claimed that the addition was sustained by the Tribunal only on the ground that there was no connecting document and the fact of expenditure or the genuineness or the business purpose of expenditure was not questioned, nor was the explanation found as incorr....
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....not call for levy of penalty under Section 271(1)(c) of the Income Tax Act. As regards the inflation in price and on the ground that no goods were received, the Commissioner pointed out to the order of the Tribunal holding that the bottles were very much in existence. The Commissioner pointed out to the reasoning of the Tribunal that even if the discrepancy was found, it could not be held that there was no supply of bottles. In the circumstances, pointing out that the assessee had not maintained the stock account on this, the Tribunal confirmed the estimate on the entire consumption of bottles. The Commissioner of Income Tax (Appeals) held that the mere disbelief of the explanation would not attract concealment penalty. As regards the allegation on the inflated purchase price of bottles, the Tribunal fixed it at Rs.1.25 per bottle and that inflation in the rate of bottles could not be inferred merely with reference to the comparable cases cited by the Assessing Officer and there was nothing on record to show that the type of bottles purchased by the assessee and other parties were the same. The Commissioner of Income Tax (Appeals) further referred to the finding as regards the exis....
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....e that the assessee had substantiated its claim by placing further evidence before the Commissioner of Income Tax (Appeals). However, as regards the addition made on account of inflation in purchases as well as as regards Section 43B disallowance, the Tribunal itself had sustained the addition of 25% and for levying penalty under Section 271(1)(c), there is no necessity for considering the case of mens rea. Referring to the decision reported in [2001] 251 ITR 99 (M/s. K.P. Madhusudhanan Vs. Commissioner of Income Tax, Cochin), learned Standing Counsel appearing for the Revenue submitted that the Tribunal misdirected itself in cancelling the penalty. 12. Learned Standing Counsel placed before us the unreported decision of the Apex Court in T.C.No.6922 of 2012 dated 25th September 2012, wherein the Apex Court cancelled the levy of penalty under Section 271(1)(c) in a case, where, while submitting the return, the assessee failed to add the provision for gratuity to its total income. As far as the present case is concerned, it is no doubt true that in the order passed by the Tribunal in the quantum appeal in I.T.A.No.No.371/Mds/1995 dated 31.08.1995, it sustained the addition under ....
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.... on the tax audit report. Thus, based on the findings, the Commissioner held that there was no case made out, to hold that there was no intention of misguiding the Officer with regard to the particulars of income and expenditure. Thus, when the findings for deletion of penalty are based on the appreciation of facts by the Tribunal, we do not find any justifiable ground to disturb the order of the Tribunal. 17. As far as the claim of the Revenue based on the decision reported in [2001] 251 ITR 99 (M/s. K.P. Madhusudhanan Vs. Commissioner of Income Tax, Cochin) is concerned, the Apex Court pointed out that though the Assessing Officer issued a notice under Section 271 of the Income Tax Act, without reference to the explanation therein that there was no need at all to make a separate reference to the explanation being invoked, the Apex Court held that the failure to refer to the explanation would not make the penalty proceedings invalid. 18. The assessee had not raised any such dispute in the appeal before the First Appellate Authority or before the Tribunal. The defence taken by the assessee was that the additions to the income by rejecting the explanation, was not made on the ....