TMI Blog2001 (5) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... .M. Manasvi vs. CIT held that it is not essential that the notice to the person proceeded against should have also been issued during the course of assessment proceedings. On the facts of that case, penalty proceedings were validly initiated and the Supreme Court also held that there was no relevant material before the Tribunal to hold that the assessee had deliberately concealed particulars of his income. Accordingly, the submission was that the decision of the apex Court was a case in which the notice had been issued at the reassessment stage whereas the facts of the present case are that the notice was initiated at the assessment stage itself. As such, the decision was not applicable. Reliance was placed on the assessment order and it was submitted that on account of a surrender of Rs. 5 lakh in the relevant assessment year, the penal provisions under s. 273(2)(a) were attracted. 4. In support of the impugned order, the authorised representative of the assessee submitted that in order to decide whether there was a contravention of the provisions of the Act, it is relevant to keep in mind whether the assessee at that point of time "knew" or "had reason to believe to be untrue". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no longer good law after the decision of the apex Court in the case of Union of India Ors. vs. Banwari Lal Aggarwal (1999) 156 CTR (SC) 300 : (1999) 238 ITR 461 (SC) and the said decision of the apex Court had been relied upon by the Kerala High Court in the case of CIT vs. D.K.B. Co. (2000) 161 CTR (Ker) 187 : (2000) 243 ITR 618 (Ker). 7. On this point, the authorised representative of the assessee interjected that even on merits, the penalty had not been validly levied. Notice had been issued under a different section and the penalty had been levied in a different section. For this purpose, our attention was invited to paper book pages Nos. 9 and 10 placed before us by him. A perusal of these pages shows that general cyclostyled notice was issued to the assessee on31st March, 1989, and on28th Nov., 1990, a notice only stating that penalty proceedings under s. 273 of the IT Act for asst. yr. 1986-87 were fixed for hearing on10th Dec., 1990. On the basis of this, the argument put forth was that the penalty had not been initiated properly and as such, assessee was deprived of the opportunity of being heard. For this purpose, our attention was invited to the impugned order at p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. (1994) 122 CTR (Cal) 290 : (1994) 209 ITR 473 (Cal) and CIT vs. Punjab Tyres. 10. In reply, the learned Departmental Representative reiterated that all the decisions cited by the authorised representative of the assessee are no longer good law and much water has flown in theGangessince then. Accordingly, it was contended that the onus is now placed upon the assessee. 11. We have heard the rival submissions and perused the material placed on our record. The decision relied upon before us and the paper book filed by the assessee have also been considered. Having gone through the entire plethora of material and arguments, we are of the considered opinion that the argument of the assessee in support of the impugned order that the penalty proceedings were not validly initiated do not have much force. In principle we are in full agreement with the arguments put forth by the learned authorised representative that in a given situation where the notice is issued under the different section and the penalty is imposed under an entirely different section, the defence which the assessee could have put forth in order to meet the charge faced by him would be severely handicapped and in eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts of that case penalty proceedings were validly initiated. Seen in this background, it is seen that the decision instead of supporting the case of the assessee supports the case of the Revenue before us, as the penalty proceedings were initiated during the assessment proceedings itself. 13. The authorised representative of the assessee has also placed reliance on H.H. Maharani Sharmishtha Bai Holkar vs. Addl. CIT for the proposition that there is no difference in language of ss. 271(1)(a) and 273(c) and both are in fact pari materia. A perusal of this judgment shows that their Lordships of the Madhya Pradesh High Court held therein that mens rea is not a necessary ingredient of the provisions contained in s. 271(1)(a) and there is no material difference in the language of s. 271(1)(a) and s. 273(c), so far as this aspect is concerned. Their Lordships further held that the onus is on the assessee to show reasonable cause for default. No reasonable cause was shown and in the facts of the case the levy of penalty was held to be valid therein. This decision of the Madhya Pradesh High Court accordingly also does not help the case of the assessee. In fact, the argument put forth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity of a provision. It is seen that the said decision is not applicable to the point in issue before us as the requirement of a bona fide belief by virtue of s. 273B of the Act is not ousted. 17. In CIT vs. Punjab Tyres, it was held that the levy of penalty under s. 271(1)(c) is not valid as admission made by assessee surrendering a certain amount does not amount to concealment of income. There no evidence was adduced by the Department showed that the assessee has consciously concealed particulars of his income in regard to unexplained investment. 18. In Sir Shadi Lal Sugar General Mills Ltd. Anr. vs. CIT, the apex Court held: "Held, reversing the decision of the High Court on that question, that the Tribunal had considered all the facts and the admission made by the appellant as well as the time of the admission. The appellant had only accepted certain amounts as taxable; it had not been accepted by the appellant that it had deliberately furnished inaccurate particulars or concealed any income. This was not a case where there was no evidence to support the Tribunal conclusion. Nor had the Tribunal acted on material which was irrelevant to the enquiry of considered mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that whenever an assessment has been completed by accepting the offer of an assessee, no penalty can be imposed. It has not been so observed by the apex Court in Sir Shadilal Sugar and General Mills Ltd. vs. CIT (1987) 64 CTR (SC) 199 : (1987) 168 ITR 705 (SC), as the Tribunal held. Its conclusion has been arrived at by a clear misappreciation of the ratio laid down in the said case." 21. Thus, after examining the cases cited before us, we are of the opinion that on the facts of the case in the present circumstances, there is no requirement to read mens rea and reasonable cause on the part of the assessee. Consequently, initiation of the penal proceedings are not vitiated by the fact that assessee has been able to meet the charge faced by him and in fact, has said everything which he could have said in his defence before the AO in reply to the notice of imposition of penalty. Coming to the aspect of the settlement arrived at by the assessee with the Department firstly, the settlement if at all is only for the purpose of not initiating penalty proceedings under s. 271(1)(c), secondly and more importantly even if there is contract of this effect, the same is contrary to the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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