TaxTMI 
TaxTMI 
2014 (7) TMI 374
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.... in passing the order u/s 271(1)(c) levying the penalty amounting to Rs. 3,22,102." 2. Facts in brief:- The assessee is an individual deriving income mostly from his proprietorship concern, M/s. Varsha Caterers, and had filed his return of income on 26th December 2000, declaring income of Rs. 1,87,890. A search and seizure action under section 132(1) had taken place on 20th April 2006, at assessee's premise, wherein, during the course of search, his statement on oath was recorded under section 132(4). In the statement, the assessee admitted that during the previous year relevant to the assessment year 2000-01, unaccounted cash of Rs. 3,04,500, has been deposited in his bank account with Cosmos Co-operative Bank Ltd., Vile Parle (West), Mumbai. Accordingly, notice under section 148, was issued vide notice dated 26th March 2007. In response to the said notice, the assessee filed his return of income on 26th April 2007, declaring income of Rs. 4,92,390, which was also included the unaccounted income of Rs. 3,04,500, declared during the course of search. In the course of assessment proceedings, the assessee filed his bank statement in respect of his proprietary concern, M/s. Varsha Ca....
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....on filed before the Assessing Officer, the assessee has set out the entire reasons as to why the penalty cannot be levied on these additions and also why Explanation 5 cannot be invoked. Once the Assessing Officer has not given any reasons for rebutting the Explanation of the assessee, then the penalty cannot be carried, because there is no reason given by the Assessing Officer on which the penalty can be confirmed. He further submitted that insofar as the addition made on account of deposits in the bank, the assessee has duly disclosed his bank account in his balance sheet and also in the return of income not only in this year but also in the earlier years. The search had taken place after a gap of six years and therefore, it was difficult to explain each and every deposit after such a long gap. However, the assessee had explain the overall source of the deposits, which has not been rebutted or found to be false in the course of penalty proceedings, either by the Assessing Officer or by the learned Commissioner (Appeals). In the quantum proceedings, the matter has been decided against the assessee only on the ground that the assessee's explanation with regard to availability of so....
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....he assessee's request to drop the penalty proceedings initiated u/s 271(1)(c) is not acceptable for the following reasons:- "Further, the learned CIT(A) has also upheld the additions made by the Assessing Officer." 10. In view of the above discussion, I am satisfied that this is a fit case for imposition of penalty u/s 271(1)(c) on the addition of Rs. 10,62,733 which is considered as sourced out of the unaccounted income of the assessee." 6. From the above, it can be seen that the only ground for levying the penalty is that the learned Commissioner (Appeals) has also upheld the addition made by the Assessing Officer. This reason alone cannot be held to be the basis for levy of penalty, as it is quite a settled law that the findings given in the assessment proceedings alone, may not justify imposition of penalty, as the consideration that arise in the penalty proceedings are different from those in the assessment proceeding. The findings in the quantum proceedings, though have a probative value, but in the penalty proceedings the explanation and the materials have to be reappraise afresh to examine, whether the assessee is guilty of concealment of income or furnishing of inaccura....
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....e appellant are dealt with as under:- 10. The argument that the additional income was declared only with the condition that penalty would be waived is not borne out of any facts. Further, the power to waive penalty u/s 273A is only with the Commissioner of Income tax subject to the conditions mentioned therein which interalia includes that the declaration of income and payment of tax on the same has to be prior to detection. In the instant case, the appellant had an undisclosed bank account which was not shown at all in the return of income filed before the search took place and only when the details of the bank account were found and the appellant was confronted with the same, he declared the additional income. It is further pertinent to note that even in the disclosed account, the A.O. found that certain entries could not be explained and hence the appellant does not satisfy the conditions of waiver. It is also not evidenced that the declaration was made subject to waiver of penalty as such declaration is meaningless and lack the authority of law. 11. The penalty has been levied when it was detected that the appellant had concealed the income in the form of undisclosed bank acc....
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....ding in his bank account number 960006 with Cosmos Co-operative Bank. The said bank account was disclosed in the Balance Sheet filed along with the return of income from year-to-year. It was further explained that the assessee was carrying out his catering business from a garage premise taken on lease. Due to flood in Mumbai in July 2005, all the old records kept by the assessee for its business purpose were fully destroyed and, therefore, the assessee could not establish the exact nature of credit entries appearing in the bank account. Further, the data pertained to the financial year 1999-2000, therefore, the explanation on the source of credits were given based on circumstantial evidences. The reconcilia-tion was made in the following manner:- 12. Besides this, it was also explained that the assessee has also sold two motorcars (owned by the assessee), during the relevant financial year, the WDV of the said cars was shown in the Balance Sheet as on 31st March 1999, amounting to Rs. 8,85,479. The sale proceeds were deposited in the said bank only. Apart from that, there were certain deposits in the form of maturity proceedings from LIC. Thus, these funds were sufficient to cover....