TMI Blog2003 (12) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Hon ble Tribunal are not of the nature of "concealment" or "inaccurate particulars" and assessee has already paid tax thereon, if any. 3. Confirming the penalty under s. 271(1)(c) of Rs. 1,47,574, as per Expln. 4 of the said section taking the view that Hon ble Tribunal, Jodhpur, has sustained the addition for unexplained purchases as per seized bills. Whereas the Hon ble Tribunal, Jodhpur, vide Appeal No. 101/Jp/1994 dt. 18th Sept., 2000, has sustained only addition of Rs. 3,08,000. Thus, alternatively even if otherwise considered the penalty under s. 271(1)(c) should be restricted to alleged income of Rs. 3,08,000. 4. Any other matter with prior approval of the Hon ble Bench." 2. Learned counsel for the assessee during the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by the seller. The AO held that the explanation of recording the bills, only when the payment was made, was not tenable. In that event, the AO was of the view that the assessee was engaged in the purchase and sales without recording them in the regular books of accounts and so, thereby, concealing the income which he noted at Rs. 3,22,587 in the form of unrecorded purchases. The AO, therefore, levied penalty of Rs. 1,47,574 under s. 271(1)(c) of the IT Act being 100 per cent of the tax sought to be evaded. 4.2 Aggrieved, the assessee carried the matter in appeal before the CIT(A) and submitted that the return of income was filed at a loss of Rs. 6,35,350 which was finally reduced to loss at Rs. 96,776 after effect of the order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that the penalty proceedings and the assessment proceedings are two separate and distinct proceedings and even if the addition had been sustained by the various authorities, it is not necessary that the penalty should be imposed. He further submitted that the assessment in this case was framed at a loss, therefore, no penalty was leviable. Reliance was placed on the decision of the Hon ble apex Court in the case of CIT vs. Prithipal Singh Co. (2001) 166 CTR (SC) 187 : (2001) 249 ITR 670 (SC). Reliance was also placed on the decision of the Hon ble Madras High Court in the case of Ramnath Goenka vs. CIT (2002) 178 CTR (Mad) 343 : (2003) 259 ITR 229 (Mad). Learned counsel for the assessee further submitted that Expln. 4 to s. 271(1)(c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is well-settled that the penalty proceedings and the assessment proceedings are two separate and distinct proceedings. The penalty under s. 271(1)(c) can be levied if the assessee furnished inaccurate particulars of income or concealed the income and failed to give plausible explanation. In the instant case, the assessee explained that the entries were made on the basis of the payments and the AO also stated that the entries of the bills found during the course of search, amounting to Rs. 3,22,587, had not been made upto 1st Sept., 1987 to which date the books of accounts had been written. However, nowhere he had commented as to whether the entries had been made by the assessee after the date of search when the payment was made. It seem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars have been concealed or inaccurate particulars have been furnished, had such income been the total income, however, in respect of reduction in loss nothing was mentioned in Expln. 4 to s. 271(1)(c), i.e., as to whether the same can be considered as concealed income for the purposes of levying the penalty under s. 271(1)(c). 4.7 From our above discussions, it would be clear that there were no such provisions in the Act before the amendment that the reduction in the loss would also be liable to be penalised. In our opinion, the issue is squarely covered in favour of the assessee by the decision of the Hon ble Punjab and Haryana High Court in the case of CIT vs. Prithipal Singh Co. (1990) 85 CTR (P H) 26 : (1990) 183 ITR 69 (P H) wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant case of the assessee. It is worth mentioning that the decision, supra, of the Hon ble Punjab and Haryana High Court, had been confirmed by the apex Court in the case of CIT vs. Prithipal Singh Co. 4.9 Similarly the Hon ble Kerala High Court in the case of CIT vs. N. Krishnan (1999) 153 CTR (Ker) 450 : (1999) 240 ITR 47 (Ker) has also taken a view similar to that expressed by Hon ble Punjab and Haryana High Court, supra, wherein it has been observed by the Hon ble Kerala High Court at p. 49 that: "It is amply clear from the perusal of s. 271(1)(c) that penalty can be determined with reference to the amount of tax and unless the tax is determined, penalty cannot be quantified. When the penalty cannot be quantified in the absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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