TaxTMI 
TaxTMI 
2018 (4) TMI 880
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....on estimate basis. iv. The decision of the jurisdictional High Court in case of CIT Vs. Aero Traders Pvt. Ltd 322 ITR 316 was not considered that penalty is not leviable when income is based on estimated profit. v. The decision of Hon'ble Karnataka High Court in case of CIT Vs. Manjunatha Cotton and Ginning Factor (2013) 359 ITR 565 was not considered for the reason that in the assessment order there is no satisfaction recorded about the charge of the penalty. Further, in the second round of the proceedings also there was no charge of penalty. vi. The decision of the High Court was not considered wherein, the set aside assessment order the twin charges were mentioned by the ld Assessing Officer of furnishing inaccurate particulars of income, and concealment of income both for initiating penalty. He referred to the penalty order dated 30.03.2011 and stated that the penalty has been levied for furnishing inaccurate particulars of income. He therefore, submitted that there is no specific charge by the ld Assessing Officer. However, penalty has been levied on different charge. vii. He further stated that penalty is levied for not substantiating the return of income in the s....
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....e books of account nor the parties and therefore, the assessee was non compliant before the ld Assessing Officer and therefore, in absence of books of accounts the ld Assessing Officer has to make an estimate of the income of the assessee. In such case it cannot be said that imposition of the penalty is not proper. Therefore, in case where the assessee's books are rejected and assessment was made on best judgment after estimating the turnover and the rate of gross profit, it cannot be said that penalty cannot be imposed. In each case of the estimated addition it is required to be examined whether there was material to implicate the assessee for having concealed or furnished inaccurate particulars of income. In fact assessment by estimate is one of the accepted methodology of the taxation. Where the assessee conceals relevant material and evidence, the revenue has no option but to make the best judgment by an estimate. An addition made by estimation is as much legal as any other assessment. In the present case, hence, it cannot be said that merely because the estimate of income penalty cannot be levied. The decisions relied upon by the ld AR of the jurisdiction high court in case of....
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....h. 10. In view of this, with the consent of the parties, at their request, we proceed to decide the issue. In the present case the order u/s 144 of the Income Tax Act was passed on 03.02.2001 wherein, the returned loss of Rs. 101143384/- was reduced to Rs. 6796680/-. In that order the addition on account of unaccounted production and sales was made to the tune of Rs. 90083560/-. Though penalty was initiated u/s 271(1)(c) of the Act, however, at the time of initiation of penalty proceedings, there was no satisfaction recorded by the Assessing Officer that whether the assessee has concealed or has furnished inaccurate particulars of income. The matter was carried up to the coordinate bench who vide order dated 01/11/2006 set aside the whole issue back to the file of the ld Assessing Officer. Pursuant to that, the ld Assessing Officer further framed the Assessment order u/s 143(3) read with section 254 of the Act, on 11.12.2006 making an addition of Rs. 71526295/- on account of trading results and also disallowing the expenditure of Rs. 19624092/-. The ld Assessing Officer initiated the penalty proceedings holding as under:- "Having regard to the nature of discussion/ disallowance/....
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....nalty under section 271(1)(c) is a civil liability. (b) Mensrea is not an essential element for imposing penalty for breach of civil obligations or liabilities. (c) Willful concealment 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 the order of the appellate authority or the 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 1(B) it should be discernible from the said order which would by a legal 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 subsection (1B). (h) The said deeming provisions are not applicable to the order....
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.... the assessment proceedings. The proceedings for imposition of penalty though emanate from proceedings of assessment, it is independent and separate aspect of the proceedings. (u) The findings recorded in the assessment proceedings in so far as "concealment of income" and "furnishing of incorrect particulars" would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on the merits. However, the vali dity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings." 14. In the present case at the time of framing the assessment order the ld Assessing Officer has recorded a satisfaction that the assessee has furnished inaccurate particulars of income and concealed its income which attracts the provisions of section 271(1)(c) of the Act. while levying the penalty the ld Assessing Officer has levied it holding that assessee has furnished inaccurate particulars of income. Therefore, as per para No. 61 of the order of the decision of the Hon'ble Karnataka High Court....