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2017 (5) TMI 1401

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....1336/Kol/2014 for A.Y. 05-06. 2. Grounds No. 1 to 6 are inter-related and therefore being taken up together. Sole issue raised by assessee in his appeal is that Ld. CIT(A) erred in confirming the order of Assessing Officer by imposing penalty of Rs.1,04,593/- u/s 271(1)(c) of the Act. For this, the grounds raised by assessee per its appeal as under:- "1. That on the facts and in the circumstances of the case, Ld. CIT(A) is unjustified in confirming the order of Assessing Officer to impose penalty of Rs. 1,04,593/- u/s 271(1)(c) of IT Act, 1961. 2. That on the facts and in the circumstances of the case, Ld. CIT(A) has erred in confirming levy of penalty u/s. 271(1)(c) by entertaining irrelevant and extraneous considerations which read "there was non-compliance during the assessment proceeds" and/or "the appellant had been non-cooperative since the very beginning". 3. That on the facts and in the circumstances of the case, Ld. CIT(A) has erred in dismissing assessee's appeal against order u/s. 271(1)(c) without appreciating that profit was estimated because of failure to produce books of account. 4. That on the facts and n the circumstances of the case, Ld. CIT(A) is wrong a....

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....oceedings u/s 271. The existence of such conditions should be discernible from the Assessment Order or order of the Appellate Authority or Revisional Authority. Even if there is no specific finding regarding the existence of the corrections mentioned in Section 271(1)(c), at least the facts set out in Explanation 1(A) & (B) it should be discernible from the said order which would by a legal fiction constitute concealment because of deeming provision. Even if these conditions do not exist in the assessment order passed, at least, a direction to initiate proceedings u/s 271(l)(c) is a sine qua non for the Assessment Officer to initiate the proceedings because of the deeming provision contained in Section 1(B). The said deeming provisions are not applicable to the orders passed by the Commissioner of Appeals and the Commissioner. The imposition of penalty is not automatic. Imposition of penalty even if the tax liability is admitted is not automatic. Even if the assessee has not challenged the order of assessment levying tax and interest and has paid tax and interest that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty,....

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.... penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings. In the light of what we have stated above, it is clear that merely because the assessee agreed for addition and accordingly assessment order was passed on the basis of this addition and when the assessee has paid the tax and the interest thereon in the absence of any material on record to show the concealment of income, it cannot be inferred that the said addition is on account of concealment. Moreover, the assessee has offered the explanation. The said explanation is not found to be false. On the contrary, it is held to be bona fide. In fact in the assessment proceedings there is no whisper about these concealment. The very fact that the assessee agreed to pay tax and did not challenge the assessment order, it is clear the conduct of the assessee cannot be construed as mala fide. Therefore, the Tribunal was justified in setting aside the orders passed by the Appellate Authority as well as the Assessing Authority. In so far as the imposition of penalty is concerned, it is not in accordance with law. No fault could be found with the Tribunal for deleting the penalty. Me....

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....s 274 of the Act found defective. Following the above principle laid down by various court we reverse the order of ld. CIT(A) in this regard and direct the AO to delete the penalty. Hence this ground of appeal of the assessee is allowed. 5. In the result, assessee's appeal is allowed. Now coming to assessee's Appeal in ITA No.1336/Kol/2014 for A.Y.06-07. 6. The only issue raised in the present appeal is against levy of penalty u/s 271(1)(c) of the Act. The grounds raised by the assessee per its appeal are as under:- "1. That on the facts and in the circumstances of the case Ld. CIT(A) is wrong and unjustified in confirming the order of Assessing Officer impose penalty of Rs. 2,93,627/- u/s. 271(1)(c) of IT Act, 1961. 2. That on the facts and in the circumstances of the case, Ld. CIT(A) has erred in confirming levy of penalty u/s. 271(1)(c) by entertaining irrelevant and extraneous facts. 3. That on the facts and in the circumstances of the case, Ld. CIT(A) has erred in dismissing assessee's appeal against order u/s. 271(1)c) without appreciating that profit was estimated because of failure to produce books of account. 4. That on the facts and in the circumstances of the ....