TaxTMI 
TaxTMI 
2013 (9) TMI 1068
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....being perverse against the facts and law deserves cancellation. 3. The order of the ld. CIT(A) is a "Non Speaking Order" is as much as it has failed to take cognizance of the written submissions filed by the appellant, remand report of the Assessing Officer and the rebuttal submissions thereof dated 24.5.2011 filed during the penalty proceedings u/s 271 (1) (c) of I.T. Act and proceedings of the appeal. The ld. CIT(A) has not considered the most relevant documents and submissions. The penalty be annulled/cancelled." 3 After hearing both the parties we find that a search was conducted in the S.L. Arora Group cases. Since the assessee was also a part of that group, a search was conducted in his premises also and the case was transferred to Central Circle-1. In response to the notice the assessee filed return of income declaring Rs. 1,62,653/- as income from commission business and Rs. 1,80,900/- as agricultural income. During the assessment proceedings it was noted that the assessee was having bank account No. 203010100009591 with UTI Bank Sector 8, Chandigarh (now known as Axis Bank). This bank account was not reflected in the return of income or the submissions made during the c....
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.... us, the ld. counsel of the assessee submitted that first of all the assessee was simply doing the business of commission agent or property agent. He was not a proper businessman and therefore, he had filed his return of income only from commission income and in this background there was no requirement for the assessee to disclose the account with Axis Bank. He further submitted that the assessee had given proper explanation regarding amount received before the Assessing Officer. In this regard he referred to various documents filed in the paper book. 7 He submitted that explanation given by the assessee was not found to be false. In any case no enquiries were conducted during penalty proceedings and therefore, in the absence of such enquiry penalty could not have been levied. He also contended that the finding given in the assessment order are not conclusive for the purpose of levy of penalty. He has also made reliance on the following decisions: CIT Vs. Anwar Ali, 76 ITR 696 (SC) CIT v Khoday Eswarsa and Sons, 83 ITR 369 (SC) Anantharam Veerasinghaiah & Co. Vs. CIT, 123 ITR 457 (SC) Devsons Pvt Ltd. Vs. CIT, 329 ITR 483 (Delhi) 8 On the other hand, the ld. DR for the re....
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................. (c) has without reasonable cause failed to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143, or (d) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,- (i) ........................ (ii) .......................; (iii) in the cases referred to in clause(c), in addition to any tax payable by him, a sum which shall not be less than twenty per cent. but which shall not exceed one and a half times the amount of the tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income." Reading of the above provision would show that this provision was enacted on the similar footing as contained in Section 28(1)(c) of 1922 Act. The expression 'deliberate' was retained in this provisions also. Later on by Finance Act 1964 in clause (c) the word 'deliberate' was omitted w.e.f. 1.4.1964 and further after such omission an explanation was also made which reads as under: " Explanation - Where the total income returned by any person is less than eighty per ....
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....d or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause(c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed; Provided that nothing contained in this Explanation shall apply to a case referred to in clause(B) in respect of any amount added or disallowed as a result of the rejection of any explanation offered by such person, if such explanation is bona fide and all the facts relating to the same and material to the computation of his total income have been disclosed by him." 11 Ld. Author in the commentary on Income Tax Law by Chaturvedi & Pithisaria's (Fifth Edition) has discussed the effects of 1975 amendment at page 8617 to 8620. We are reproducing para 61.8 at page 8619 as under: "61.8 New Explanation 1 provides that where in respect of any facts material to the computation of his total income, an assessee fails to offer an explanation or is unable to substantiate an explanation offered by him or offers an explanation which is found to be false, the amount added or disallowed in computing the total income of such person as a result thereof will be treated as his....
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....our of the assessee. When the matter traveled to the Hon'ble High Court, Hon'ble High Court reversed the decision of the Tribunal. The matter traveled to the Hon'ble Supreme Court. The Hon'ble Supreme Court referred to two decisions of Bombay High Court and made following observations: "In CIT v. P.M. Shah [1993] 203 ITR 792, the High Court at Bombay observed that the Explanation to section 271(1)(c) created a legal fiction. It was that the assessee would be deemed to have concealed the particulars of his income or furnished inaccurate particulars thereof in the circumstances set out in the Explanation. But for such a legal fiction, it could never have been said that there was any concealment or furnishing of inaccurate particulars of income simply because the returned income was less than 80 per cent. of the assessed income. The Explanation shifted the burden of proof on the assessee. Therefore, it said (page 797); "when the Explanation is being resorted to by the Income-tax Officer or by the Inspecting Assistant Commissioner in penalty proceedings, it is essential that the assessee must be informed that penalty proceedings, it is essential that the assessee ....
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....urnished inaccurate particulars thereof and, consequently, be liable to the penalty provided by that section. No express invocation of the Explanation to section 271 in the notice under section 271 is, in our view, necessary before the provisions of the Explanation therein are applied. The High Court at Bombay was, therefore, in error in the view that it took and the Division Bench in the impugned judgment was right." 14 Thus from above it is clear that explanation being part of section gets invoked automatically once the show cause notice is issued. There was another argument that there can be so many reasons for surrender for which another decision of Hon'ble Apex Court in case of Sir Shadilal Sugar and General Mills Ltd. Vs. CIT (1987) 168 ITR 705 was relied. This contention was also rejected by the following observations: "Learned counsel for the assessee then drew our attention to the judgment of this court in Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705. He submitted that the assessee had agreed to the additions to his income referred to hereinabove to buy peace and it did not follow therefrom that the amount that was agreed to be added was conce....
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....giving inaccurate particulars while filing the return. The judgment in Dilip N. Shroffs case [2007] 8 Scale 304 (SC) has not considered the effect and relevance of section 276 C of the Income-tax Act. The object behind the enactment of section 271(1) (c) read with the Explanations indicates that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Willful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under section 276 C of the Income-tax Act." 16 From the above discussion on legal issues, following points emerge: (a) Penalty u/s 271(1)(c) is not of penal nature but "Strict Civil Liability"; (b) After insertion of explanation, the burden has been shifted on the assessee to prove that he has not concealed the particulars of income or filed inaccurate particulars of the income; (c) Even if an amount is surrendered even then penalty is leviable if the assessee fails to offer explanation. 17 Before us, the ld. counsel of the assessee referred to very old decision of Hon'ble Supreme Court in case of CIT V. Anwar Ali (supra). ....
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....st Point Property Pvt. Ltd,. The payment for such purchase can be made by any of the party. Further Shri Pritam Singh transferred a sum of Rs. 1,19,90,000/- which was received from M/s West Point Property Pvt. Ltd,. to assessee's Axis Bank account No. 30201010009195 in some urgent circumstances. It is further stated that Shri Pritam Singh had received a sum of Rs. 1.20 crore from M/s West Point Property Pvt. Ltd,. It is further stated that the amount was withdrawn by the assessee from Axis Bank and returned to M/s West Point Property Pvt. Ltd,. Affidavit of Shri Pritam Singh to the same effect has also been filed which is placed at page 3 of the paper book. Three receipts for receipt of a sum of Rs. 40 lakh each from the assessee signed by M/s West Point Property Pvt. Ltd,. are filed at page 4,5 & 6 of the paper book. The ld. counsel of the assessee also referred to MOU (copy of which is field at page 18 to 19 of the paper book). MOU is between S/Shri Rajiv Kumar, Rajwant Singh, Charanjit Singh and Pritam Singh as party of the first part and S/Shri Harish Bhasin on behalf of M/s West Point Property Pvt. Ltd,. as party of second part. Through this MOU the assessee along with three o....
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....aid bank account , it is found the A.O. that during the year under reference the assessee has deposited Rs. 1.20 crore in the said bank account on various dates. In this regard, the assessee could not offer any satisfactory explanation. However, the onus to prove the source of money found to have been received by the assessee is on him, which he could not explain satisfactory during the course of assessment proceedings. 3. The contentions of the assessee that he was not given an opportunity to produce Sh. Pritam Singh is not correct on this date, as it is evident from the record that he was afforded proper opportunity to give the addess of Shri Pritam Sing and was also asked to produce him. Further, the onus to produce Sh. Pritam Singh was to be discharged by the assessee himself which he has failed to do. Further, the assessee's statement is also not correct that the A.O. has admitted that the money was to belonging to the assessee. 4. The contention of the assessee that the money was paid back to M/s West Print Property Pvt. Ltd. can not be accepted because the receipts filed by the assessee for a sum of Rs. 1.20 crore which is shown to have been received back by M/s West Poi....
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....ank account despite having more than sufficient opportunity both at the time of assessment proceedings as well as at the time of appellate proceedings. The explanation given by the assessee that the said money had been received as advance from Pritam Singh who in turn had received it from West Point Properties Pvt. Ltd. could have been very easily proved as genuine if the said persons i.e. Pritam Singh or West Point Properties Pvt. Ltd., had been produced before the A.O. to confirm the claim of assessee. However it is seen that the assessee could not even give the detailed address of the said persons making it impossible for the A.O. to cross verify the claim made by the assessee. The provisions of section 68 clearly require the assessee to discharge the onus cast upon him in order to prove identity, genuineness and creditworthiness of the person from whom the amounts had been received. However the assessee apart from giving the name of the person who allegedly gave the money, could not provide any further details to establish the identity. The copy of the affidavit file before the A.O. wherein one Mr. Harish Bhasin claiming to be Director of West Point Properties pvt. Ltd. does no....