TMI Blog2014 (5) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... lty is and cannot be an automatic consequence of quantum addition and be justified on that count – AO cannot summarily make sweeping generalizations without pointing out in what manner the cases are distinguishable and why the legal propositions laid down by the judicial precedents do not apply to the facts of the case – the very well-reasoned order of the CIT(A) is upheld – Decided against Revenue. - I.T.A. No.: 254/Agr/2013 - - - Dated:- 14-2-2014 - Bhavnesh Saini and Pramod Kumar, JJ. Athesham Ansari for the Appellant Ankit Gupta for the Respondent ORDER Pramod Kumar, Accountant Member : 1. By way of this appeal, the assessee appellant has challenged the correctness of learned Commissioner (Appeals)'s order dated 4th April 2013, in the matter of penalty under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for the assessment year 2008-09. 2. Grievance raised by the Assessing Officer, in substance, is that, on the facts and in the circumstances of the case, learned Commissioner (Appeals) erred in deleting the impugned penalty of Rs 3,93,149. 3. The material facts are not in dispute. The assessee b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid cash by the assessee at the time of purchase of the bricks and the bricks were purchased on credit basis. From the copy of the minutes book, the copies of which are forming part of the assessment order also, it is apparent that the President of the Society has arranged for the bricks for construction and he will take the payment when loan will be received from the Bank. This itself proves that the President of the society had made the payment for the bricks on behalf of the society and the society might have received donations from the President. When the bench asked the learned AR to produce the auditor's report in form 10B alongwith accounting policy, which formed the part of the balance sheet, he produced photocopy of the audit report without certifying it to be true. The balance sheet nowhere states that the notes on account will form the part of the audited balance sheet. The notes on accounts must form part of the audited balance sheet and profit and loss account. Under these facts, it could not be proved by the assessee what system of accounting is being followed by assessee consistently. Under these facts and circumstances of the case, we are of the view that no int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o requisite discussion has been made by the A.O. as to how the concealment or furnishing of inaccurate particulars is proved. Viewed differently; the A.O. has also not discussed as to how the assessee's explanation furnished in response to penalty show cause notice is enough to counter the presumption of concealment. I find that A.O. has merely relied upon the fact that quantum addition was confirmed by both the appellate authorities viz. CIT(A) ITAT. (ii) It is an important legal dictum that penalty proceeding is a separate proceeding than the assessment proceedings. Although the factual inference culled out in the assessment order and appellate order would play a significant role in finalization of penalty proceedings; but all the fact and inferences and also the legal and factual submissions made by the assessee have to be considered afresh. The addition can be made if the assessee is not able to satisfactorily explain the transactions. But for imposition of penalty U/S 271(1)(c), it has to be proved beyond any reasonable doubt that the assessee has concealed its income or has furnished wrong particulars with a view to conceal its true income. The quantum appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and hence he held that since the appellant's arguments were not fully proved, so the addition was sustainable. The above is certainly enough for confirming the addition and hence the same found favour with the Hon'ble ITAT also. But, again, the possibility of their being post-facto arrangement would not be sufficient to prove the case from view point of levy of penalty. Such arrangement has not been proved beyond doubt. There is always a possibility that the brick-seller, being a small trader, and trusting on the words of the President that cash would be sent to him in due time, issued a cash memo. In such a situation, all other legs of transactions would fit in the theory/explanation being tendered by the appellant; and, at the same time, not issuing a 'credit memo' would merely be a technical mistake on the part of the brick-seller and also the President of assessee society; without there being any unexplained cash in the hands of assessee society. The above example/possibility goes a long way in suggesting that the cash transactions, allegedly occurred between the Brick Seller, the President, and the appellant's society are though suspected, but, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the fact that the vendor was paid for the bricks subsequently and it is thus a reasonable explanation that purchases were made on credit. There is nothing on record to establish, beyond a reasonable doubt, that any cash purchases did take place. As this Tribunal has confirmed the quantum addition and Hon'ble High Court are now in seisin of the matter in appellate proceedings, we refrain from making any observations on merits beyond saying that whatever may have been the justification in sustaining the impugned addition, the assessee has an explanation and the explanation is such that it cannot be rejected as an improbable, unacceptable or unreasonable explanation in the course of penalty proceedings. It is also important to note that the Assessing Officer has not given any independent reasons for imposing the penalty but has merely referred to and relied upon the fact that this Tribunal has confirmed the quantum addition. This approach proceeds can only approach on the basis that a concealment penalty is an automatic consequence of the quantum addition - a proposition which has been unequivocally rejected by Hon'ble Courts above time and again. No doubt findings in the q ..... X X X X Extracts X X X X X X X X Extracts X X X X
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