TaxTMI 
TaxTMI 
2017 (11) TMI 188
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....and for the sake of convenience they are being disposed of through this consolidated order. 2. The brief facts of the case are that the assessee, during the year under appeal, had filed his return of income declaring income at Rs. 9,38,237/-. The assessment was completed under section 144 of the Income Tax Act, 1961 at an income of Rs. 12,616,510/-. The AO, while making the assessment, had made addition of the total amount due to the sundry creditors and expenses payable as on 31/03/2008 by holding that the same were not allowable under the cash system of accounting. The tax auditor, in the tax audit report, due to an inadvertent error, had erroneously stated that the method of accounting followed by the assessee was "cash" instead of "mercantile" which was the method of accounting being followed by the assessee. On appeal, the Ld. CIT (Appeals) deleted the additions of Rs. 69,71,507/- and Rs. 39,40,594/- out of total addition of Rs. 74,31,007/- and Rs. 41,58,026/- made on account of creditors and commission expenses respectively. The Ld. CIT (Appeals), however, sustained addition of Rs. 5,11,590/- towards the closing balances of two creditors on the ground that their PAN numbers ....
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....ed any reply in this regard. 2.3 On appeal, the penalty under section 271 (1) (b) was also confirmed by the Ld. CIT (Appeals) and now the assessee has approached the ITAT and has challenged the confirmation by taking the following grounds of appeal - ITA No. 5743/Del/2015 :- "1. That the order of the Learned CIT (Appeals)-17 New Delhi is arbitrary, biased and bad in law and in facts and circumstances of the case in so far as it confirms levy of penalty under section 271(l)(b ) by the Assessing Officer. 2) That the Learned CIT (Appeals) has grossly erred in confirming the levy of penalty under section 271 (1) (b) amounting to Rs. 40,000/- without appreciating the fact that the appellant had a reasonable cause. 3) That the Learned CIT (Appeals) has grossly erred in confirming the levy of penalty without the Assessing Officer having issued precise and specific notice for each default u/s 271(1)(b) as envisaged in the provisions of the Act. That the appellant craves leave to add, alter or delete the above grounds of appeal at the time of hearing. 3. At the outset, the Ld. Authorised Representative submitted that as far as the penalty under section 271 (1) (c) was concer....
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....ssa 83 ITR 26, had laid down the position of law by holding that the Assessing Officer is not bound to levy penalty automatically simply because the quantum addition has been sustained. Also in case of CIT v. Khoday Eswara (83 ITR 369) (SC), it has been held that penalty cannot be levied solely on basis of reasons given in the original order of assessment. 5.1 The Hon'ble Supreme Court has reiterated the law in case of Dilip N. Shroff v. Jt. CIT 291 ITR 519 by holding in Para 62 that finding in assessment proceedings cannot automatically be adopted in penalty proceedings and the authorities have to consider the matter afresh from different angle. 5.2 Thus, the statute requires a satisfaction on the part of the Assessing Officer. He is required to arrive at a satisfaction so as to show that the assessee has concealed the amount or has furnished inaccurate particulars and this onus is to be discharged by the Department. While considering whether the assessee has been able to discharge his burden the Assessing Officer should not begin with the presumption that he is guilty. Since the burden of proof in penalty proceedings varies from that in the assessment proceedings, a finding in ....
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.... case, it is seen that the penalty order is woefully silent on the issue as to how this satisfaction of furnishing of inaccurate was arrived at. The quantum addition on which the penalty has been imposed pertains to disallowance out of sundry creditors, donations not written back and audit fee expenses debited twice. The Ld. CIT (Appeals) has not examined the issue in detail but has simply confirmed the penalty by relying on the findings of the AO and that of the Ld. CIT (Appeals) in the quantum proceedings. However, there is no finding by the authorities below on the issue as to how the 'furnishing of inaccurate particulars' has come to be established so as to warrant imposition of penalty. Thus, it is apparent that the penalty has been imposed as an automatic outcome of the confirmation of the quantum addition. Considering the entirety of the circumstances, in our view, the impugned disallowance does not invite the provisions of Section 271(1)(c) of the Act. Accordingly, we set aside the order of the Ld. CIT (Appeals) and direct the AO to delete the penalty u/s 271(1)(c) of the Income tax Act, 1961. 5.7 As far as the issue of penalty u/s 271(1)(b) is concerned, from a perusal of....
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.... cause for the said failure A clause beginning with "notwithstanding anything" is sometimes appended to a section in the beginning with a view to give the enacting part of the section in case of conflict an overriding effect over the provision of Act mentioned in the non obstante clause (see Orient Paper and Industries Ltd v State of Orissa, AIR 1991 SC 672) A non obstante clause may be used as a legislative device, to modify the ambit of the provision of law mentioned in the non obstante clause, or to override it in specified circumstances (see T R Thandur v Union of India, AIR 1996 SC 1643) The true effect of the non obstante clause is that in spite of the provision or Act mentioned in the non obstante clause, the enactment following it will have its full operation or that the provisions embraced in the non obstante clause will not be an impediment for the operation of the enactment (see Smt Parayankandiyal Eravath Kanapravan Kalliani Amma v K Devi, AIR 1996 SC 1963) Therefore, in order to bring in application of section 271C in the backdrop of section 273B, absence of reasonable cause, existence of which has to be established by the assessee, is the sine qua non Levy of penalty ....