TaxTMI 
TaxTMI 
2003 (2) TMI 150
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....r the sake of convenience, we first take up I.T.A. No. 1076 (All.) of 1993. I.T.A. No. 1076 (All) of 1993 (Under section 271(1)(c) of the Income-tax Act, 1961): 4. This appeal by the assessee is filed on the following effective grounds of appeal: "1. Because the learned Commissioner of Income-tax (Appeals) has erred in law and on facts in holding that penalty under section 271(1)(c) was justified and upholding the same. 2. Because the stray piece of paper alleged to be construable as Balance Sheet of some business, already stood adjudicated from the stage of the Hon'ble ITAT in the case of AOP in the following words : '11. The papers seized and referred to at serial Nos. 12 and 13 even if construable as balance sheets relate to 1971-72 and 1972-73 and neither have they been established to be in the handwriting of any of the three persons in question nor any connection has been established with them.' And on a due consideration of the said findings, the learned authorities below should have accepted the appellant's contention and should have deleted the penalty. 3. Because in any case and without prejudice to the aforesaid contention with regard to the major add....
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....section 132(5), the assessee could not explain the nature and source of acquisition of following assets during the financial year 1971-72 relevant to the assessment year under appeal, i.e., 1972-73: (1) Unexplained investment in pawned ornaments Rs. 689 (2) During the Search Operation carried out at the residential premises of Hiralal at Pokhra Bhinda on 25/26th November, 1976 the balance sheet as on Kartik Badi 14 of St. Year 2028 (18-10-1971) was found. The balance sheet is as under: Liabilities (Rs.) Assets (Rs.) Asharfi Lal 1,22,343 ....
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.... 927 12,866 Cash 64,168 &....
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.... Bhagirathi Ram 27,134 ---------- 54,268 &n....
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....bsp; -------------------- Rs. 1,78,172 say Rs. 1,78,170 -------------------- 7. The Assessing Officer also initiated penalty proceedings under section 271(1)(c) of the Income-tax Act vide assessment order dated 28th March, 1985. The action of the Assessing Officer was challenged before the CIT(A) and the Id. CIT(A) confirmed the addition on issue Nos. 1 and 2 in a sum of Rs. 689 and Rs. 1,36,683. However, CIT(A) reduced the u....
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.... copy of the order of the Income-tax Appellate Tribunal, Allahabad, 'B' Bench, dated 26th April, 1990 in I.T.A. No. 449 (All.) of 1987 allowing the appeal of the assessee partly, copy of the notice dated 12-3-1981 under section 148 of the Income-tax Act and reply filed before the Assessing Officer. During the course of argument, we have directed both the ld. counsel for the assessee and ld. D.R. to file copies of statement of Asharfi Lal and of the assessee. Ld. counsel for the assessee in second Paper Book has filed copy of the same. Ld. counsel for the assessee also filed copy of the order dated 9th December, 1982, passed by the Income-tax Appellate Tribunal, Allahabad, A-Bench, in ITA No. 451 (All.) of 1981 for the assessment year 1968-69 in the case of AOP, Hira Lal, Asharfi Lal and Bhagirathi Ram. Ld. counsel for the assessee argued that during the search in the house of Asharfi Lal, one balance sheet was found from Pokhra Bhinda Village. He has further argued that the Department treated the same as AOP. He has relied on the order dated 9th December, 1982 of the Income-tax Appellate Tribunal in the case of AOP and further argued that the Tribunal gave a judgment on the aforesa....
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....estion of income being assessed in the hands of individual and it could be assessed only in the hands of AOP. He has further argued that the findings of the Tribunal are against the findings of the Income-tax Appellate Tribunal in the case of AOP vide order dated 9th December, 1982. Ld. counsel for the assessee relied on ITO v. Ch. Atchaiah [1996] 218 ITR 239 (SC). Ld. counsel for the assessee further argued tnat except alleged balance sheets, there is no evidence that the assesses was doing any business. He has relied on Banaras Textorium v. CIT [1988] 169 ITR 782 (All.) and argued that different view could be taken in the penalty proceedings. He has further argued that no satisfaction has been recorded by the Assessing Officer in the assessment order while initiating penalty proceedings. He has relied on CIT v. Ram Commercial Enterprises Ltd. [2000] 246 ITR 568 (Delhi). 10. On the contrary, ld. D.R. argued that initial onus was upon the assessee to prove its case. Ld. D.R. relied on CIT v. Geo Sea Foods [2000] 244 ITR 44 (Ker.). Ld. D.R. further argued that the assessee concealed his income and did not disclose correct income to the Assessing Officer. The ld. D.R. relied on th....
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....ery clear that the penalty proceedings under section 271(1)(c) of Income-tax Act could be initiated by the Income-tax authorities in the course of any proceedings under this Act, if the authority is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. Therefore, penalty proceedings, though initiated in the proceedings under Income-tax Act, yet it is independent in nature and have to be considered separately. The quantum proceedings and penalty proceedings are essentially different proceedings altogether. Hon'ble Supreme Court, in the matter of CIT v. Anwar Ali [1970] 76 ITR 696 on this proposition held that the penalty proceedings are penal in character. It is further held that it cannot be said that the finding given in the assessment proceeding for determining or concluding the tax is conclusive. However, it is a good evidence. Before penalty can be imposed, the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income. Hon'ble Allahabad High Court in the matter of Banaras Textorium's case held as under: "In the scheme of the Act, the proceedings for i....
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....ies." 17. The ratio of the aforesaid authorities clearly show that the penalty and quantum proceedings are entirely different proceedings. The findings given in the assessment proceedings are relevant and have probative value but such proceedings are not material alone and may not justify imposition of penalty. The assessee could have challenged the finding given in the assessment proceedings in the penalty proceedings. The onus is upon the assessee to rebut the presumption of concealment of income by cogent, material and reliable evidence. The assessee could prove from the facts and circumstances of the case that it was not a case of penalty and could shift his burden of proof upon the Department and then the Department will have to prove that it was a case of penalty on the facts and circumstances of the case. 18. In this case, after the search, the Department has initiated proceedings against the AOP in the name of Hira Lal, Asharfi Lal and Bhagirathi Ram and later by findings of the Income-tax Appellate Tribunal in the case of AOP vide order dated 9th December, 1982 such proceedings in the status of AOP were quashed. Hon'ble Supreme Court in the matter of Ch. Atchaiah'....
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....um of Rs. 689. On the face of these findings of the Assessing Officer, the same appears to be contradictory and cannot stand to reason. It had never been the case of the Department that the balance sheet was recovered from the house of the assessee. The claim of Assessing Officer in the assessment order had been that on search balance sheet was recovered and seized from the residential house of Hira Lal at Pokhar Bhinda. The residential address of the assessee, as given in the assessment order is Mundera Bazar, Chauri Chaura, Gorakhpur. The same address is given everywhere in other orders also which clearly shows that the assessee had not been residing at the place of recovery of the balance sheet at Pokhar Bhinda. Therefore, there is no question of recovery of balance sheet at the residence of the assessee. We have also directed the parties to file statement of Asharfi Lal recorded on the date of search, ie., 26-11-1977. Copy of the same is filed before us. We have gone through the statement of Asharfi Lal made on 26-11-1976 at the time of search and seizure. He had denied his association with the assessee Bhagirathi Ram. He also denied any business connection with the assessee in....
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....1. During the course of argument, Id. D.R. could not point out whether the aforesaid order of the Income-tax Appellate Tribunal, Allahabad 'A' Bench, dated 9th December, 1982 was at all challenged by the Department or was reversed by the highest judicial authority. The finding of facts are clearly against the revenue Department. The Tribunal clearly held that there was no AOP as alleged by the Department and further no business relation has been established amongst Hira Lal, Asharfi Lal and Bhagirathi Ram (assessee). No handwriting of these persons was found on the alleged balance sheet. Accordingly, the Tribunal held that the same evidence is not relevant in the case of AOP. These findings of fact have become final between the parties. During the course of penalty proceedings the assessee has denied having any connection with the Balance Sheet found from the residence of Hira Lal during the course of search on 25-11-1976. No balance sheet was recovered from the house of the assessee. Therefore, assessee was not at all under any legal obligation to explain the recovery of the balance sheet from the house of Hira Lal for the purpose of imposition of penalty. 22. We may mention he....
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....proved by the CIT(A) vide his order dated 9th February, 1987. The CIT(A) granted partial relief to the assessee in a sum of Rs. 5,150 and accordingly estimated the unexplained investment in a sum of Rs. 10,150. This addition was made primarily on estimated investment. Thereis no definite finding of fact with regard to concealment of income for filing of inaccurate particulars. Mere revision of income would not amount to concealment. The findings of the Assessing Officer himself are modified by the CIT(A). Therefore, on such estimation no penalty should have been imposed by the Assessing Officer. 25. The fourth addition made by the Assessing Officer was with regard to the unexplained investment in construction of house which has been deleted by the Income-tax Appellate Tribunal, Allahabad, vide order dated 26-4-1990. Therefore, this addition could not be made basis for imposition of penalty. Therefore, the CIT(A) has clearly erred in confirming the penalty on this issue. 26. Ld. counsel for the assessee relied on the decision of Allahabad High Court, in the matter of S. Devendra Singh's case in which it was held "that the Explanation merely raises a presumption which is rebut-....
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....gued that no satisfaction has been recorded by the Assessing Officer in the assessment order while initiating penalty proceedings and he relied upon the judgment of Hon'ble Delhi High Court, Ram Commercial Enterprises Ltd. 's case . The Id. counsel for the assessee in his Paper Book filed copy of the notice under section 148 issued to the assessee bearing dated 12th March, 1981. Ld. counsel for the assessee argued that it was issued to the assessee being member of the AOP. Ld. counsel for the assessee further argued that it was issued prior to the order of the Income-tax Appellate Tribunal, in the case of AOP, dated 9-12-1982 referred to above. We have already indicated that the Income-tax Appellate Tribunal, Allahabad Bench, vide order dated 9-12-1982 has quashed the assessment in the status of AOP. These findings became final between the parties. The penalty under section 271(1)(c) was issued vide assessment order dated 28-3-1985. The details of the search and incriminating material are mentioned in the assessment order and on the basis of the identical facts and circumstances, it was stated in the assessment order that the main assessment is made in the case of AOP and the asses....
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.... 32. This appeal by the assessee is filed on the following effective grounds of appeal: "1. Because the learned Commissioner of Income-tax (Appeals) was not justified in passing the order ex parte and in confirming the levy of penalty under section 271(1)(a). 2. Because the learned Commissioner of Income-tax (Appeals) has erred in law and on facts in holding that: 'the appellant had taxable income which was determined on the basis of documents found during the course of search of his premises.' and on that basis, inter alia, held that the penalty was leviable. 3. Because the documents referred to by the authorities below stood already adjudicated from the stage of the Hon'ble I.T.A.T in the case of AOP and the learned Commissioner of Income-tax (Appeals) on a due consideration of the said adjudication should have held that the appellant had nothing to do with the business alleged to have reflected in the said documents and therefore he carried no obligation to file the return. 4. Because on a due consideration of the attendant facts and circumstance of the case, the authorities below should have held that the appellant was under no obligation to file the return ....