TMI Blog1994 (3) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the insurance amount had been received much before the filing of the return and since the assessee failed to disclose income of Rs. 1,87,178 penalty proceedings were initiated under section 271(1)(c) of the Act. The Assessing Officer levied penalty of Rs. 1,22,017 which was confirmed by the learned Commissioner of Income-tax (Appeals). 3. Shri L.R. Vasudeva, the learned Counsel for the assessee submitted that the first assessment was made by the Assessing Officer on 29-11-1984. It was pointed out that the learned CIT(A) set aside the first assessment and asked the Assessing Officer to make a fresh assessment. The fresh assessment was made by the Assessing Officer on 9-3-1988 in which an addition of Rs. 1,87,178 was made and penalty proceedings under section 271(1)(c) were initiated. It was submitted that the said addition was sustained by the first appellate authority and the Tribunal without going into the merits of the addition and on a technical ground held that the addition had to be made in the hands of the assessee-firm for assessment year 1983-84. Drawing our attention to the Tribunal's order dated 28-12-1993, in R.A. No. 51/Chandi/1993, it was pointed out that the tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt added or disallowed in computing the total income of the assessee be deemed to represent the income in respect of which the particulars have been concealed. It was, however, pointed out that there was a proviso to the said Explanation according to which nothing contained in Explanation 1 was to apply to a case in respect of any amount added or disallowed as a result of the rejection of any explanation offered by such person, if such explanation was bona fide and all the facts relating to the same and material to the computation of its total income had been disclosed by it. In this regard, it was pointed out that the factum of receipt of Insurance claim of Rs. 1,87,178 had been duly disclosed by the assessee in its return for assessment year 1984-85. It was also pointed out that all the facts pertaining to the claim filed by the assessee with the Insurance Company etc. had been disclosed by the assessee and nothing had been concealed. It was submitted that the assessee was under a bona fide belief that the income of Rs. 1,87,178 was assessable in the year relevant to assessment year 1984-85 and that no such income was to be shown for assessment year 1983-84. It was therefore, sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, 1968. During the assessment year 1968-69, the assessee claimed Rs. 48,346 on account of damage caused to the stock-in-trade by fire. This loss was allowed by the Assessing Officer. On May 20, 1968, the assessee was awarded a sum of Rs. 75,550 by the insurance company as moneys payable under Fire Insurance Policy in respect of the loss suffered by the assessee on January 26, 1968. The assessee claimed before the Assessing Officer that a sum of Rs. 20,135 only was taxable under section 41(1) of the Act during assessment year 1969-70. This sum was arrived at after deducting some credits of Rs. 56,042 from the insurance receipts. The Assessing Officer rejected this claim and taxed the entire sum of Rs. 76,229 under section 41(1) which was upheld by the Tribunal. The High Court observed that what were destroyed by fire was the assessee's stock-in-trade and that it was liable to be taxed when the said amount had been recovered. The High Court accordingly held that the whole amount of Rs. 75,550 received from the insurance company was taxable in the assessment year 1969-70. On the anology of the above decision, the learned Counsel for the assessee vehemently argued that the amount of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he quantum of proof to discharge it was that as required in a civil case i.e. by preponderance of probabilities. It was submitted that the assessee in the instant case had proved by preponderance of probabilities that there was no concealment of income. 9. Reliance was also placed on the Calcutta High Court decision in ITO v. Burmah Shell Oil Storage Distributing Co. of India Ltd. [1987] 163 ITR 496 for the proposition that where the assessee disclosed all papers and documents and claimed deductions which were disallowed, there could be no concealment of income and even the above precedent for initiation of penalty proceedings was non-existent. It was, therefore, submitted that in the instant case also even the initiation of penalty proceedings under section 271(1)(c) was bad in law because on the basis of material available on record, the Assessing Officer could not satisfy himself that the assessee had concealed the particulars of its income. 10. The learned Counsel for the assessee also submitted that the facts in the case of McDowell Co. Ltd. v. CTO [1985] 154 ITR 148 (SC) were entirely different and that the Assessing Officer was wrong in deriving inspiration from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 1983-84 not on merits but on a technical ground against which a reference has been granted under section 256(1) of the Act. The learned D.R. has further submitted that it is not necessary that additional material should always be available for levy of penalty in addition to the material on which the assessment was based. The Hon'ble jurisdictional High Court of Punjab and Haryana in the case of Shiv Narain Khanna has, however, further held that the very same material can form the basis for the assessment and penalty, "depending on the facts and circumstances of the case". We have, therefore, to see whether the material available on record at the time of assessment proceedings was sufficient to impose penalty under section 271(1)(c) of the Act. We are, however, clear in our mind about one thing, namely, that penalty is not automatic and simply because an addition has been upheld does not ipso facto mean that the penalty must also be levied. That, in our opinion, will depend on the facts and circumstances of each case. 13. So far as the facts and circumstances of the present case are concerned, the facts have been narrated in the earlier part of the order and may b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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