TMI Blog1999 (1) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... eclaring income at Rs. 1,60,000. 4. As the books of accounts were seized by the Department the assessee took sometime for inspection of the documents and for taking copies of the accounts. Subsequently, a return was filed on 19th March, 1986, declaring total income of Rs. 2,44,760. The Department had got the books audited under s. 142(2A) by M/s Sanghvi Co., C.A. The AO after referring the case to the IAC, under s. 144A and after getting his instruction from him framed the assessment order under s. 143(3) on 26th Sept., 1986, computing the total income at Rs. 2,57,820. The AO also initiated penalty proceedings under s. 271(1)(c) of the Act. In reply to the show-cause notice, the assessee stated before the AO, that the books of accounts relevant for asst. yr. 1983-84 were seized by the Department and extracts were not allowed upto the end of 1985, that the time for filing the return of income was extended and hence provisional return of income was filed on 24th March, 1984, with an explanatory letter that the assessee could complete the work of taking extracts of seized documents only by February, 1986, and on 19th March, 1986, immediately after ascertaining the correct position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting material seized remained in the custody of the ITO right from 3rd Nov., 1982, till December, 1986, when the assessee were allowed only to extract copies for getting the necessary audit completed on 18th March, 1986, and correct returns filed on 19th March, 1986, itself. But even then, the Department had chosen to appoint its own auditors viz. M/s Sanghvi Co. to re-audit the whole accounts and finalise the figures of correct income under the guidance of the jurisdictional IAC, who in turn had scrutinised the details and passed on instructions under s. 144A to the ITO for completing the assessments. These instructions did not contain a whisper about the concealment aspect or the levy of penalty under s. 271(1)(c). It shows obviously that the IAC was fully satisfied that the returned income filed on 19th March, 1986, were in full agreement with the re-audited figures of income by the departmentally appointed auditors and there were no differences particularly of any detection of concealment, if any, between the seized books and the returns filed on 19th March, 1986. The ITO cannot take a double stand, on one hand that the originally filed voluntary returns on 24th March, 1984, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n levying all four of the penalties without any positive legal evidence in support of such levy in each of the cases under consideration. Hence, the penalties levied are deleted as baseless and unwarranted ." 6. In the present appeal filed by the Department, the learned Departmental Representative pointed out that the assessee did not file any ground of appeal before the CIT(A) in the quantum appeal except the ground relating to under s. 43B. Therefore, the assessee is deemed to have concealed the particulars of income in respect of all the additions made by the AO to the returned income except the disallowance under s. 43B which was deleted by the first appellate authority. On the other hand the learned counsel for the assessee has placed reliance on the findings given by the CIT(A). 7. The learned counsel has also pointed out that the additions made are of petty amounts, that too of a routine nature which do not call for levy of penalty under s. 271(1)(c). The books of accounts were got audited at the instance of the Department and no serious mistake in the books of accounts was found by the auditors. In the circumstances, the levy of penalty is unwarranted and the CIT(A) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e explained before the ITO. Even though there was no provision for filing provisional return, the explanatory letter makes it abundantly clear that the assessee s intention was bona fide. Since the application for extension of time for filing the return was rejected by the AO the assessee had no other way but to file a return but at the same time as the books of accounts were in the custody of the Department, the assessee could not compute the total income on the basis of the books of accounts as it took several months to complete the process of taking the extracts from the seized books of accounts. Finally the return of income was filed only on 19th March, 1986, wherein income was declared at Rs. 2,44,760. Considering the entire facts and circumstances of the case, if at all there is any default committed under s. 271(1)(c), it had to be considered with reference to the valid return filed on 19th March, 1986, as the AO himself did not consider the original return dt. 24th March, 1984, as valid for assessment purpose. The CIT(A) observed that AO cannot blow hot and cold in refusing to treat the provisional return as not valid on the one hand and treat it as valid for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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