TaxTMI 
TaxTMI 
2018 (3) TMI 71
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....ure operation u/s 132 of the Act was carried out in Accurate Group of cases on 26.07.2006 and the assessee was also covered under search. Accordingly, notice u/s 153A of the Act was issued and served upon the assessee on 26.03.2007. In response to the said notice, the assessee filed its return of income declaring total income of Rs. 1,63,78,980/-. However, the assessment was completed at an income of Rs. 1,97,70,980/- by making the addition of Rs. 33,92,000/- on account of scrap sales and Rs. 50,000/- which was made in the original assessment to cover up the discrepancies. 5. Being aggrieved the assessee carried the matter to the ld. CIT(A) who although deleted the addition of Rs. 33,92,000/- made by the AO on account of value of scrap sales but substituted the said addition by Rs. 3,97,815/- which was disclosed by the assessee itself. Thereafter, the AO levied the penalty u/s 271(1)(c) of the Act on the said addition. 6. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted as under: ".......1. At the outset it is submitted that there is no satisfaction recorded by the AO in the assessment order with regard to levy of penalty under section 271(1)(c). ....
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....he AO has levied penalty of Rs. 142033/- under section 271(1)(c) in respect of this addition of Rs. 3,97,850/- offered by the assessee and sustained by the CIT(A). The ld. AO has grossly erred in imposing penalty under section 271(1)(c). The assessee has neither concealed any income nor furnished any inaccurate particulars of income. It may be submitted that it is merely a case of bonafide omission that this amount of Rs. 3,97,850/- was not included in the return of income. This happened because while filing the return of income, one of the seized paper being page no.37 of Annexure A-2/B-3 escaped the attention and because of it, the scrap sales amounting to Rs. 3,97,850/- for AY 2001-02 was omitted to be included in the return of income. However, during the course of assessment proceedings the above amount of Rs,3,97,850/- were pointed out by the appellant himself as admitted by AO himself in the assessment order. It is respectfully submitted that in the returns of income filed pursuant to search, various years comprised in the 6 years prior to search year, the assessee has declared income of Rs. 2,69,93,835/- and as per the CIT(A) order, no addition made on account of scrap....
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.... in the return of income. However, the AO made an addition of Rs. 33,92,000/- but the ld. CIT(A) deleted the addition made by the AO holding it to be non-sustainable and upheld the addition only to the extent of Rs. 3,97,850/- which was offered by the assessee. It was contended that non inclusion of Rs. 3,97,850/- was merely a case of bonafide omission which happened because at the time of filing the return of income, one of the seized paper being page no. 37 of Annexure A- 2/B-3 escaped the attention and due to that the scrap sales amounting to Rs. 3,97,850/- was omitted to be included in the return of income. However, during the course of assessment proceedings, the above amount of Rs. 3,97,850/- was pointed out by the assessee itself as admitted by the AO in the assessment order. Therefore, the penalty u/s 271(1)(c) of the Act was not leviable on the said addition offered by the assessee itself. It was further submitted that the AO in the assessment order has not recorded any satisfaction as regards to the concealment of income or furnishing of inaccurate particulars of income, he simply stated that penalty proceedings u/s 271(1)(c) of the Act had been initiated. The ld. Counsel....
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....pellant is also not tenable." 13. On the basis of aforesaid observations of the ld. CIT(A), it can safely be held that on the legal issue, the assessee argued the matter before the ld. CIT(A). In the present case, it is noticed that the AO in the assessment order dated 29.12.2008, simply stated that the penalty proceedings u/s 271(1)(c) of the Act have been initiated separately. He did not mention as to whether the penalty proceedings were initiated for furnishing of inaccurate particulars of income or concealment of income, so, there was no satisfaction of the AO. Moreover, the estimated additions which were made by the AO were deleted by the ld. CIT(A) and the only addition sustained was on account of scrap sales which was disclosed by the assessee itself. It is an admitted fact that no penalty proceedings were initiated by the AO in respect of that sustained addition which is evident from the copy of show cause notice dated 29.12.2008 issued by the AO wherein it has been mentioned as under: "Whereas in the course of proceedings before me for the assessment year 2001-2002 it appears to me that you: "Have without reasonable cause failed to comply with a notice under section ....
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....alment is not an essential ingredient for attracting civil liability; (d) existence of conditions stipulated in section 271(1)(c) is a sine qua non for initiation of penalty proceedings under section 271; (e) the existence of such conditions should be discernible from the assessment order or order of the appellate authority or revisional authority; (f) even if there is no specific finding regarding the existence of the conditions mentioned in section 271(1)(c), at least the facts set out in Explanation 1(A) and (B) should be discernible from the order which would by fiction constitute concealment because of deeming provision; (g) even if these conditions do not exist in the assessment order passed, at least, a direction to initiate proceedings under section 271(1)(c) is a sine qua non for the Assessing Officer to initiate the proceedings because of the deeming provision contained in sub-section (1B)." 17. In the present case also as we have already pointed out in the former part of this order that the AO has not recorded the satisfaction in the assessment order as to whether the assessee concealed the income or furnished inaccurate particulars of income and also in the show cause ....