TMI Blog1996 (2) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... s on account of concealed income had been made, yet no directions for the initiation of penalty proceedings under section 271(1)(c) had been made in the assessment orders. He, accordingly, initiated proceedings under section 263, and, after having heard the assessee, passed the impugned order with the directions in the following terms : " The Assessing Officer should, therefore, make fresh assessment in accordance with law. He is free to initiate concealment penalty proceedings, if he is satisfied that such proceedings are attracted." Aggrieved, the assessee has come up in appeals before the Tribunal. 3. It was submitted by the learned counsel for the assessee that he concedes the issue of concealment of income on merits. He does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns to that effect renders the assessment order erroneous. The CIT in this case was, therefore, justified in initiating proceedings under section 63 and passing directions of the nature as in the present case. His next contention was that merely because the addition was made on agreed basis, the department is not precluded or estopped from initiating the penalty proceedings. In this connection, reference was made to the following decisions : (1) Addl. CIT v. Indian Pharmaceuticals [1980] 123 ITR 874 (MP), (2) Addl. CIT v. Nathoolal Balaram [1980] 125 ITR 596/3 Taxman 370 (MP) and (3) Addl. CIT v. Kantilal Jain [1980] 125 ITR 373/[1981] 5 Taxman 92 (MP). 5. We have considered the facts and circumstances of the case and find that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the particulars of his income or furnished inaccurate particulars of his income. Until such satisaction is recorded, no penalty proceedings for concealment can be initiated. In the present case, no such satisfaction has been recorded, and, therefore, it was not legally proper for the CIT to record his own satisfaction and direct the Assessing Officer to initiate the penalty proceedings on the basis of that satisfaction. The next contention of the learned counsel was that where no direction for initiation of penalty proceedings for concealment is made in the assessment order, it is not legally possible to initiate the penalty proceedings or direct initiation of penalty proceedings. 6. I have given our careful thought to all the aspects of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of their agriculture holding from which amounts are lying with us. The transaction now questioned might be pertaining to such source. However, they are not related to our firm nor to partners individually. Despite the above factual position, we submit that just to buy peace and close the disputed matter, we agree to the additions on the following conditions : (a) Rs. 20,000 (Rs. 10,000 of 1-4-1988 and Rs. 10,000 of 3-9-1988) be added in the total income for assessment year 1989-90. (b) Rs. 19,000 (Rs. 39,000 of 13-2-1990, minus Rs. 20,000 of proceeding clause (a) be added in the total income for assessment year 1990-91. (c) That there will not be any penalty under section 271(1)(c) or prosecution whatsoever, on above additions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be revised under section 263. There is also preponderance of the judicial opinion in favour of the view that where direction of initiation of the penalty proceedings has not been passed in the assessment order, initiation of such proceedings subsequently is legally barred. As regards the three court decisions cited by the learned departmental representative, I find that they hardly offer any assistance to the revenue in the case before us. In the Madhya Pradesh High Court decision in Indian Pharmaceuticals' case, there was failure on the part of the ITO to take notice of the facts attracting provisions relating to penalty. In the present case, there was no such failure on the part of the Assessing Officer. Rather, he, in the exercise of his ..... X X X X Extracts X X X X X X X X Extracts X X X X
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