AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 1586
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.... respondent Assessee was selected for scrutiny and notice was issued under Section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as the Act ), which was dated 19th August 2013. Thereafter, notice was issued under Section 142(1) of the Act along with a detailed questionnaire. The representative of the respondent Assessee duly appeared on behalf of the Assessee and made submissions. 4. The assessment was completed under Section 143(3) of the Act. The income of the respondent Assessee as assessed was Rs. 5,87,06,566/- after addition of Rs. 5,32,60,536/- under the head income from other sources. The Assessing Officer, however, did not initiate any penalty proceedings under Section 271(1)(c) of the Act. 5. The respondent Assessee filed an appeal, which was dismissed. Subsequently, in exercise of power under Section 263 of the Act, the Principal Commissioner of Income Tax, Chennai-I passed an order holding that on examination of the records it was found that the assessment order had established that the Assessee had concealed his income by filing inaccurate particulars of income and thus penal provisions under Section 271(1)(c) of the Act were clearly attracted. The A....
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....ment afresh in accordance with the provisions of law." 7. The respondent Assessee filed an appeal being I.T.A.No.2231 of 2016 against the order under Section 263 of the Act in so far as it related to penalty. 8. By the order under appeal, which was a common order, the appeal, being I.T.A.No.2231 of 2016, filed by the respondent Assessee was allowed and the other appeals were dismissed. The Appellate Tribunal held thus: "6.We have considered the rival submissions on either side and perused the material available on record. The Assessing Officer completed the assessment under Section 143(3) of the Act by making an addition of Rs. 5,32,60,563/- under the head income from other sources. However the Assessing Officer has not recorded any satisfaction for initiating penalty proceeding under Section 271(1)(c) of the Act. The Commissioner in exercise of his power under Section 263 of the Act found that the failure of the Assessing Officer to record satisfaction and to initiate penalty proceeding under Section 271(1)(c) of the Act is not only erroneous but also prejudice to the interest of the Revenue. We have carefully gone through the provisions of the Section 271(1)(c) of ....
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....issioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. [Explanation 1.] For the removal of doubts, it is hereby declared that, for the purposes of this sub-section, (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the o....
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....eheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 11. Section 263 of the Act empowers the Principal Commissioner or the Commissioner as the case may be to enhance or modify the assessment, cancel the assessment or direct a fresh assessment as the circumstances of the case might justify. 12. Referring to the definition of assessment in Section 2(8) of the Act, Mrs.Hemalatha, learned Standing Counsel appearing on behalf of the Revenue submitted that assessment included reassessment. 13. Section 271(1) of the Act provides as follows: "Failure to furnish returns, comply with notices, concealment of income, etc. 271.(1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person (a) [***] (b) has failed to comply with a notice under sub-section (2) of section 115WD or under sub-section (2) of section 115WE or under sub-section (1) of section 142 or sub-section (2) of section 143 or fails to comply with a di....
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....anation referred to as the first preceding year) which is sufficient to cover the amount represented by such receipt, deposit or outgoing or value of such investment (such amount or value hereafter in this Explanation referred to as the utilised amount) shall be treated as the income of the assessee, particulars of which had been concealed or inaccurate particulars of which had been furnished for the first preceding year; and where the amount so added or deducted in the first preceding year is not sufficient to cover the utilised amount, that part of the amount so added or deducted in the year immediately preceding the first preceding year which is sufficient to cover such part of the utilised amount as is not so covered shall be treated to be the income of the assessee, particulars of which had been concealed or inaccurate particulars of which had been furnished for the year immediately preceding the first preceding year and so on, until the entire utilised amount is covered by the amounts so added or deducted in such earlier assessment years. Explanation 3. Where any person fails, without reasonable cause, to furnish within the period specified in sub-section (1) of sect....
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....e formula shall be ignored; (b) where in any case the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished has the effect of reducing the loss declared in the return or converting that loss into income, the amount of tax sought to be evaded shall be determined in accordance with the formula specified in clause (a) with the modification that the amount to be determined for item (A - B) in that formula shall be the amount of tax that would have been chargeable on the income in respect of which particulars have been concealed or inaccurate particulars have been furnished had such income been the total income; (c) where in any case to which Explanation 3 applies, the amount of tax sought to be evaded shall be the tax on the total income assessed as reduced by the amount of advance tax, tax deducted at source, tax collected at source and self-assessment tax paid before the issue of notice under section 148.] Explanation 5. Where in the course of a search initiated under section 132 before the 1st day of June, 2007, the assessee is found to be the owner of any money, bullion, jewellery or other valua....
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....or (ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and, (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or (b) the due date for filing the return of income for such previous year has expired but the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. Explanation 6. Where any adjustment is made in the income or loss declared in the return under the proviso to clause (a) of sub-section (1) of section 143 and additional tax charged under that section, the provisions of this sub-section....