AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 1864
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....nd the aforesaid grounds of appeal at or before the time of hearing of appeal." 2. None has appeared on behalf of the assessee when this appeal was called for hearing despite the fact that on the last date of hearing the assessee sought adjournment vide request on record dated 07.02.2018 and accordingly, the matter was adjourned to 14.03.2018 i.e. today. Since, none has appeared on behalf of the assessee up to 1.40 P.M. therefore, we propose to hear and disposed off this appeal ex-parte. 3. The assessee has filed written submissions on record. We have considered the written submissions of the assessee and heard the ld. DR as well as perused the order of the authorities below. The assessee filed his return of income on 26.07.2006 which was assessed u/s 144 of the Act on 20.12.2011 at a total income of Rs. 83,03,000/-. The AO made addition of Rs. 15,25,000/- as well as Rs. 65,80,000/- on account of unexplained cash deposit in the bank account u/s 69 of the Act. The AO initiated proceedings u/s 271(1)(c) of the Act in respect of addition of Rs. 15,25,000/-. The assessee though challenged the addition made by the AO before the ld. CIT(A) and further, before this Tribunal however,....
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.... Tribunal then, in the penalty proceedings only defence available to the assessee is that though the explanation of the assessee was not accepted by the AO however, the same is bonafide. We find that the assessee has not furnished any such explanation either before the Assessing Officer in penalty proceeding or before the ld. CIT(A) in the appellate proceedings. Even what the assessee has contended before the ld. CIT(A) is only the same decisions as we have referred in the forgoing paragraphs and nothing else. The assessee has not uttered even a single sentence about the source of the deposit made in the bank account and therefore, when no explanation at all was furnished by the assessee then the question of the same being bonafide does not arise. The ld. CIT(A) has considered this issue in para 3 to 4.3 as under:- 3. The appellant has taken following grounds of appeal as under:- 1. The learned Assessing Officer has grossly erred in fact as well as in law in imposing penalty of Rs. 499321/- u/s 271(1)(c) of the I.T. Act, 1961. 2. The appellant prays leave to add to after and/or amend the aforesaid grounds of appeal at or before the time of hearing of appe....
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.... of these facts, it is clear that the assessee has no explanation regarding concealed income against the proposed action for such penalty. Therefore, it has been deemed fit to impose of the penalty u/s 271(1)(c) of the I.T.Act. 1961. Considering all the facts and circumstances of the case, I satisfied that the assessee has deliberately & willfully concealed the income. Therefore, penalty u/s 271(1)(c) of the I.T.Act. 1961 for Rs. 4,99,321/-/- is hereby imposed, which is worked out as under: 1. Tax on declared income 4,064/- 2. Tax on assessed Income 5,03,385/- 3. Tax sought to be evaded (2-1) 4,99,321/- 4. Minimum penalty 100% of above 4,99,321/- 5. Maximum Penalty 300% of above 14,97,963/- 6. Penalty imposed 4,99,321/- 4.2 During the appellate proceeding the appellant has filed written submission as under and also argued the case on the same basis. "In the present case, the assessee filed a return on 26th July, 2006 declaring income at Rs. 1,39,837/-. The assessment proceedings were carried by way of scrutiny assessment. Throughout the course of proceedings the humble appellant continuously protested ....
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....erged in the process of judicial churning beginning with the case of Dilip C Shroff 291 ITR 519 and crystallizing after rendering of judgment in Reliance Petro products Pvt. Ltd reported in [2010] 322 ITR 158 , is that disallowance of any claim cannot become the basis of the levy of penalty under the said provision. The aforesaid rule has since been followed in umpteen cases: 1. CIT v/s Filterex Technologies p. Ltd. 120161380ITR 222 (Karn). In this case the Hon 'ble Karnataka High Court has taken the view that Penalty proceedings are quite different from assessment proceedings. It is well-settled that the levy of penalty is not automatic if the addition or the disallowance is sustained by the appellate authorities. The ingredients of Sec271 (1)(c) have to be satisfied for levying the penalty. The fact situation emerging in the matter was that a sum of Rs. 79,98,878/- was paid without deducting TDS and was accordingly disallowed u/s 40(a)(ia). ITAT 's order cancelling the penalty was sustained by the High Court. 2. CIT v HP State Forest Corporation Ltd. 120121 340 ITR 204(H.P.) In this case the Hon 'ble Himachal Pradesh High Court has taken the view tha....
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....lty, the CIT(A) took the view that merely because the claim was debatable and was disallowed by the revenue authorities, would not ipso facto convert the declaration made by the assessee into a non-declaration or the particulars into incorrect particulars. His order was upheld by the ITAT and the Hon'ble High Court took the view that no penalty could be levied in such a case. 7. Mehsons Export v/s ITO[2012] 347 ITR 639(All) In this case the assessee who had purchased raw material from nomads, who could not be produced for verification for obvious reasons. The penalty levied by the AO was confirmed by the CIT(A) and the ITAT . However, the Hon'ble Allahabad High Court took the view that concealment of Income can be assumed, but concealment has to be alleged and found as a finding of fact. It was also held that failure to produce some of the suppliers would not amount to having made a wrong claim. The High Court accordingly quashed the penalty. 8. Price Water House Coopers Pvt. Ltd. v/s CIT [2012]348 ITR 306 (SC),In this matter Tax Audit Report was filed along with the return and that it unequivocally stated that the provision for payment was not allowable U....
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....les [2013] 356 ITR 703(Mad) The Madras high Court held that it was not clear as to whether it was a case of suppression of turnover or of estimation of income at a lower rate. When the revenue itself had not come out with clear case of suppression of turnover and where there was no specific finding with regard to such factual aspect, imposition of penalty under section 271(1)(c) was not warranted. 12. Naresh Chandra A2rawal v/s CIT [2013] 357 ITR 514 (All) In the present case, nothing was concealed by the assessee. It was the AO who had rejected the books of account in the second round and applied the 8 per cent, net profit rate prescribed under section 44AD. In the instant case, the turnover was more thus than 40 lakhs, so section 44AD was not applicable, none the, less the AO was inspired with the provision of section 44AD and made the addition by estimating the net profit rate, at 8 per cent. When the addition was made on estimate basis, no penalty under section 271(1)(c) of the IT Act could be imposed as per the ratio laid down in the case of OT v. Arjun Prasad Ajit Kumar (2008) 214 CTR (All) 355. Moreover, it may be mentioned that no finding of deliberate concealment ....
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....t followed and, therefore, though for different reasons, the first appellate authority set aside the order levying penalty, the Tribunal correctly appreciated the facts and in a proper perspective and was justified in not interfering with the order passed by the appellate authority setting aside the penalty order. In that view of the matter, we do not see any justification to interfere with the well considered order passed by the Tribunal. Thus, the substantial questions of law are answered in favour of the assessee and against the revenue. 14. CIT v/s Krishi Tver Retreadinji & Rubber Ind. [2014] 360 ITR 580 Raj.The Hon'ble Rajasthan High Court speaking through division bench held that the additions were sustained purely on estimate basis and no positive fact or findings had been found to make the said addition. Penalty under section 271(1) (c) could not be levied on such guesswork or estimation. 15. CIT v/s Whiteline Chemicals [2014] 360 ITR 385 Gui In this case Tribunal had observed that no penalty could be imposed merely because account books of assessee were rejected and profit was estimated on basis of fair gross profit ratio. Tribunal found no additional....
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....fails and it is dismissed 18. CIT v/s Shvam RajSin'h [2014] 367 ITR 74 (P&H) It was claimed that there was no intentional understatement of income or deliberate furnishing of inaccurate particulars on the part of the assessee. The plea of the assessee was found to be plausible and it cannot be held to be without any substance. Thus, under the circumstances, the levy of penalty by the Assessing Officer and Commissioner of Income-tax (Appeals) was not justified. In view of the above, the appeal disposed of dismissed accordingly. 19. CIT v/s Navan Builders [2014[ 368 ITR 722(Bom) Once it turns out that the claim of the assessee could have been considered for deduction as per a person properly instructed in law and is not completely debarred at all, the mere fact of confirmation of disallowance would not per se lead to the imposition of penalty. Since addition and disallowances on which penalty was imposed was highly debatable issue, Tribunal was justified in deleting the penalty levied under section 271(1) (c). 20. CIT-II Lucknow v/s Jal Vidyut NiRam Limited MANU/UP/0358/2016 The Allahbad High Court opined as follows : We are unable to agree with the afo....