TMI Blog2011 (7) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore, the retraction has no relevance. It is also to be noted that the seized documents revealed unaccounted transactions which also support the statement of the trustee that a part of donations received were not accounted. Under these circumstances, the explanation of the assessee that there were no unaccounted donations cannot be considered bona fide. - ITA Nos. 38 & 39 (Mum.) of 2009 - - - Dated:- 29-7-2011 - Shri R.S. Padvekar, and Shri Rajendra Singh, JJ. Represented By: Shri G.P. Trivedi for the Appellant. Shri Farrokh V. Irani for the Respondent. ORDER Rajendra Singh, - These appeals by the revenue are directed against different orders both dated 17.10.2008 of CIT(A) for Assessment Years 1989-90 and 1990-91. The only dispute raised in the two appeals is regarding levy of penalty under section 271(1)(c) of the Income tax Act, 1961. As the dispute raised is identical in both the appeals, these are being disposed of by a single consolidated order for the sake of convenience. 2. Briefly stated, the facts of the case are that the assessee Trust had been created as an Educational Trust which was registered with Charity Commissioner, Mumbai as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k was for safeguarding against possible theft or pilferage. The payment to Mr. Mansoor Virani was explained as payments made out of unaccounted donations for the purpose of construction of school buildings. As regards the notings in diary A-19 and A/20, it was submitted that notings were either reimbursement of certain expenses or money given to trustee for incurring expenses for the trust. The donations given were duly recorded in the books of account and addition had been made only on the ground that benefits of section 11 and 12 were denied to the assessee. It was further submitted that mere additions in the assessment did not establish concealment. Moreover, the difference between returned income and assessed income was on account of mere difference of opinion and the issue was highly debatable as the matter had been referred to 3rd Member. In such cases, it was pointed out that no penalty could be levied. The assessee trust had been created solely for educational purposes and was eligible for deduction under section 10(22) of the Act. The Assessing Officer, however, did not accept the contentions raised. It was observed by him that it was an admitted fact that the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mere addition in the assessment or the fact that the assessee had not filed any appeal cannot automatically lead to concealment. It was also submitted that additions made were debatable and in such cases, no penalty for concealment of income could be imposed. It was further submitted that even if the additions were correctly made, entire income was exempt under section 10(22) of the Income tax Act and there was no tax liability. Even if exemption under section 10(22) was not granted, the issue whether assessee was entitled to exemption under section 10(22) of the Act was highly debatable which was clear from the fact that there was difference of opinion on this issue between the two Members of the Bench and the issue had to be referred to 3rd Member. Though the ld. 3rd Member decided the issue against the assessee and held that the assessee was not entitled to exemption in relation to additions made, the issue remained debatable. In such cases, it won't be appropriate to levy penalty. The ld. AR referred to the decision of the Tribunal in case of Asia Satellite Telecommunications Co. Ltd. v. Dy. CIT [IT Appeal No.488 (Delhi) of 2005] in which it was held that no penalty was leviabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile appeal cannot be the basis for levy of penalty. 5.1 It is true that penalty proceedings are different from assessment proceedings as held by Hon'ble Supreme Court in the case of Anantharam Veerasinghaiah Co. v. CIT [1980] 123 ITR 457 and the findings given in the assessment are not conclusive in the penalty proceedings in which it is open to the assessee to prove that there was no concealment of income. Each case has to be evaluated on its own facts and the case of penalty has to be considered under the provisions of Explanation (1) to section 271(1)(c). It is also a settled legal position as held by the Hon'ble Supreme Court in the case of Union of India v. Dharamendra Textile Processors 306 ITR 277 that willful concealment is not required to be proved by the revenue and that penalty under section 271(1)(c) is only a civil liability. Thus mensrea is not required to be proved by the revenue. The case of the penalty has to be evaluated under the provisions of section 271(1)(c) of the Act. Explanation-I to section 271(1)(c) deems certain additions/disallowances in computation of total income to represent the income in respect of which particulars have been concealed. As per E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed documents revealed unaccounted transactions which also support the statement of the trustee that a part of donations received were not accounted. Under these circumstances, the explanation of the assessee that there were no unaccounted donations cannot be considered bona fide. The explanation of the assessee in relation to other additions also cannot be considered as bona fide as the additions were based on seized documents and the explanations are not supported by any evidence. However, the additions of Rs. 21,180/- and Rs. 6,000/- on account of donations given have been made only on the ground that the assessee had been denied exemption under section 11 and 12 of the Act. There is no dispute that the donations given were accounted. Therefore, in our view, it would not be appropriate to levy penalty in respect of additions on the basis of donations given. We therefore, hold that the assessee had concealed the particulars of income within the meaning of the provisions of Explanation-I to section 271(1)(c) to the extent of additions confirmed by the Tribunal except the additions in relation to donations given. 5.4 The ld. AR for the assessee has argued that the additions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ona fide and no penalty could be imposed in such cases. But this is not the position in this case. In this case as we have seen earlier, the assessee had not accounted the income and had concealed particulars of income. Penalty is, therefore, leviable on the basis of tax sought to be evaded in relation to the concealed income. Since tax has been found to be payable in relation to concealed income, the penalty has been correctly levied by Assessing Officer @ 100% of tax sought to be evaded. 5.5 The ld. AR of the assessee has relied on the decision of the Tribunal in the case of Asia Satellite Telecommunication Co. Ltd. (supra). In this case, the assessee, a non-resident company had derived income from lease of Satellite transponders capacity. The assessee had not returned the income on the ground that the income was not taxable. Both the Assessing Officer and CIT(A) had held that income was not taxable under section 9 (1)(i) but was taxable as royalty under section 9(1)(vi). The appeal against the order of the Tribunal had been admitted by the High Court on the substantial question of law and the issue was thus debatable. It was under these circumstances that ITAT held that explan ..... 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