TaxTMI 
TaxTMI 
2018 (1) TMI 1238
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....h, the assessments have been made for the A.Ys 2007-08 to 2009-10 both on the assessee as well as on the society. 3. During the course of search proceedings, the assessee denied having received any money as mentioned in the seized receipts. The AO however, observed that the receipts are on account of fees and therefore, brought the amount mentioned in the receipts to tax on substantive basis in the hands of the society and on a protective basis in the hands of the assessee. Thereafter, he initiated penalty proceedings u/s 271(1)(c) of the Act in both the cases. 4. Meanwhile, the assessee as well as the society filed appeals before the CIT (A). Before the CIT (A), the assessee offered the income in his own hands and requested to take into consideration the taxes of Rs. 2.2 crores already paid towards the income assessed. The CIT (A), taking into consideration the assessee's offering of the income confirmed the addition on substantive basis in the assessee's hands and thereafter deleted the addition in the hands of the society. Neither the assessee nor the Revenue filed any appeal before the ITAT. The order of the CIT (A) in the assessee's case has thus become final. But in the cas....
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....R, on the other hand, supported the orders of the authorities below and submitted that the assessee is the Secretary of the Society and has issued receipts under his hand and his signatures have been confirmed by him during the search proceedings and that initially the assessee had stated that the receipts were issued by him in the capacity of Secretary on behalf of the society and on the basis of such statement, the AO has made the substantive addition in the hands of the society. However, since the assessee had issued the receipts under his hand, the AO has also treated the receipts as income of the assessee on protective basis. She submitted that there is no dispute regarding receipt of unaccounted money and that the CIT (A) has confirmed the substantive addition in the hands of the assessee. Therefore, according to her, the initiation of penalty proceedings in the hands of the assessee is on the basis of the seized material and the CIT (A) has also brought out as to how the assessee was the kingpin of the Society and had utilized the unaccounted/undisclosed money for purchase of properties in his own individual name and in the names of his family members and in the name of his ....
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....tion 142, or (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or (d) has concealed the particulars of the fringe benefits or furnished inaccurate particulars of such fringe benefits,] he may direct that such person shall pay by way of penalty,- (i) (ii) in the cases referred to in clause (b), in addition to tax, if any, payable by him, a sum of ten thousand rupees for each such failure (iii) in the cases referred to in clause (c) [or clause (d)], in addition to tax, if any, payable] by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits] or the furnishing of inaccurate particulars of such income or fringe benefits. [Explanation 1.-Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner] to be false, or (B) such person offers an explanation which ....
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.... and the quantum proceedings were concluded at that stage. The penalty proceedings were initiated therein in the case of the assessee and the case had travelled up to the Hon'ble High Court and the Hon'ble High Court held that the fact of the income from the transaction already being treated on substantive basis in the hands of the sister concerns were relevant to be considered during the penalty proceedings u/s 271(1)(c) of the Act. The Hon'ble High Court therefore, set aside the issue to the file of the ITAT to decide the appeal afresh by considering the relevant facts. The Hon'ble Gauhati High Court in the case of Metal Stores vs. CIT (1990) 186 ITR 612 (Gau) has held that there cannot be any protective penalty. 12. Further, the learned Counsel for the assessee had placed reliance upon the judgment of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory (Cited Supra) wherein additions to income were agreed to by the assessee during the appellate proceedings and concealment was discovered in appellate proceedings and therefore, it was held that the penalty proceedings should have been initiated by the appellate authority u/s 271....