TaxTMI 
TaxTMI 
2017 (7) TMI 204
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....uant thereto, the Assessing Officer initiated Penalty Proceedings under Section 271(1)(c) of the Income Tax Act for all these assessment years and on 21/09/1989, decided the Penalty Proceeding against the assessee holding the assessee liable to pay penalty. The said order is passed on 21/09/1989. The Assessee preferred an appeal before the Commissioner (Appeals). The said appeal came to be dismissed under Judgment and Order dated 26/02/1990. Aggrieved thereby, the assessee filed appeal before the Tribunal. The Tribunal confirmed the order imposing penalty upon the assessee. 3 The learned counsel for the assessee strenuously contended that the order of the Assessing Officer in the Assessment Proceedings holding that the assessee is not carrying on the business of Draft Discounting has been negatived by the Tribunal under its Order dated 13/07/1993. The Tribunal held that the assessee carries on business of Draft Discounting and earns commission, however, observed that it would be appropriate to consider the commission at Rs. 2/per thousand instead of Rs. 1/per thousand. The order of Assessing Officer imposing penalty was passed before the Quantum Appeal was decided by the Tribunal.....
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....sidered is whether Explanation to Section 271(1)(c) of the Act could be invoked. 8 The relevant dates are as under : The Assessment Order for the year 1982-83 to 1985-86 passed by the Assessing Officer is dated 30/12/1987. The same has been confirmed by the Commissioner (Appeals) in the year 1986 and 1989. The Tribunal allowed the appeal filed by the assessee against the Orders of the Assessing Officer and the Commissioner in the Assessment Proceedings on 13/07/1993. The Assessing Officer initiated the Penalty Proceedings and passed Order holding assessee liable to pay penalty under Section 271(1) (c) on 21/09/1989. The Commissioner (Appeals) confirmed the said Order levying penalty on 26/02/1990. 9 On perusal of the dates, it is manifest that the Penalty Proceedings were initiated by the Assessing Officer before the Tribunal had decided the Quantum Appeal. The basis of initiation of Penalty Proceeding and holding the assessee liable to pay penalty was that the assessee claims that he was engaged in the business of Discounting Draft was rejected and as such, the assessee has concealed the particulars of income. 10 However, the Tribunal in the Quantum Appeal has held that the as....
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....ils to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this subsection, be deemed to represent the income in respect of which particulars have been concealed. In the present case, the amount has not been added to the income of the Assessee. In Assessment Proceedings, Tribunal had observed that in many cases Tribunal has accepted Rs. 1/per thousand as commission and in some cases at Rs. 2/per thousand. In present case, it is considering Rs. 2/per thousand. 13 The contention of the assessee in the Assessment Proceedings is that the assessee carried on the business in Draft Discounting. The deposits represented the drafts received from different parties and the commission of the assessee was Rs. 1/per thousand. 14 In the Assessment Proceedings, the Assessment Officer did not accept the contention of the assessee and held that the assessee's claim that he was engaged in business of discounting drafts was rejected and the a....
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....the business of Draft Discounting. The assessee has stated that the amount in the account is the amount of the drafts received of which assessee charges Rs. 1/per thousand as commission. Explanation (1) to Section 271(1)(c) of the Act states that if a person fails to offer an explanation or offers an explanation which is found by the Assessing Officer to be false or such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person, as a result thereof shall for the purpose of Clause (c) of the said SubSection be deemed to represent the income in respect of which particulars have been concealed. In the present case, no addition of the amount has been made, nor is a case of disallowance. Even the Tribunal had accepted the case of the assessee that he is carrying on the business of Draft Discounting. It is also observed that in many cases, the Tribunal has taken a view that in case of Draft Discounting, income is conside....