TMI Blog2010 (4) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment penalty is leviable. But there should be finding has to be recorded that the difference in the income return and the income assessed is due to the fraud or gross or wilful neglect on the part of the assessee. In the instant case, the lower authorities have not recorded any such findings. The books of account of the assessee not wholly amenable to verification. That at best can only lead to inference that the result shown by the assessee are inconclusive. But that is far from saying that there is any fraud or gross or wilful neglect on the part of the assessee. There may be justification for making addition to the assessment; there was no justification for imposing penalty because the department had not established that what was added by them in the assessment represented the income of the assessee. The penalty order should be self-contained one, the findings that there has been concealment or furnishing of inaccurate particulars of income recorded in the assessment proceedings cannot automatically transferred to the penalty order and the concealment or furnishing of inaccurate particulars as specifically required to be recorded in the penalty order. Failure in this regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer summarized the facts relevant to the addition of Rs. 25,88,026 made on account of bogus cash purchases, with reference to which impugned penalty of Rs. 15,00,000 was levied, in the following manner ".....During the accounting year relevant to the assessment year 1989-90, the assessee made purchases of Rs. 5,19,47,851 out of which cash purchases were claimed to be of Rs. 2,25,84,154. Out of this, the assessee accounted for cash purchases to the extent of Rs. 25,88,026 on the last day of the accounting year. When this was brought to the notice of the assessee in the initial assessment proceedings, the assessee stated that the amounts were given to the Purchase Manager as purchase advances and the account was finally settled on the last day of accounting year by debiting the purchases account. In order to verify these purchases, the books of account of the assessee were then called for and it was found that there were several interpolations and corrections in the books of account on various dates. In the process of verification of genuineness of these cash purchases, the assessee was asked to furnish complete details of addresses of sellers on 13-2-1992. In respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried forward figures were corrected. Similar corrections and interpolations were also made with reference to the so-called advances given on the following dates : Date of advance Amount Cash folio No. 30-5-1988 1,10,000 157 6-6-1988 80,000 175 14-6-1988 1,70,000 203 9-2-1989 2,35,000 399 13-2-1989 1,20,000 413 21-2-1989 4,10,000 439 All these corrections and interpolations were made in the Books of Account to show that advances were made to the Purchase Manager. From the above discrepancies, it is explicit that the assessee made systematic attempt to increase the purchases in order to reduce the profits. However, the fact is that these purchases were nothing but mere entries made on the last day of the accounting year to avoid tax liability. In addition to aforesaid discrepancies mentioned above relating to the local purchases, some purchase were said to have been made from out station parties also namely, M/s. Mohd. Dastagir and Sons, 133, Bhavanipet, Pune, amounting to Rs. 3,98,912 and from M/s. Anisa Rehman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account such as the stock book and inward register despite several opportunities given. Examining the explanation of the assessee in response to the penalty notices in the light of the above factual background, the Assessing Officer observing that the assessee has not submitted any explanation on the issues raised in the assessment order and the discrepancies pointed out clearly support the acts concealment of income and furnishing of inaccurate particulars thereof by the assessee, levied the impugned penalty of Rs. 15,00,000, vide order of penalty dated 20-3-2006 passed under section 271(1)( c ) of the Act. 5. On appeal before the CIT(A), the assessee contended inter alia that in the original quantum proceedings, the CIT(A) deleted the addition made by the Assessing Officer, though, when the said order of the CIT(A) was set aside by the Tribunal, in the reassessment proceedings that ensued in pursuance of the order of the Tribunal, the said addition was repeated and the same stood confirmed, and as such this is not a fit case for levy of penalty for concealment. Rejecting the various contentions of the assessee against the penalty imposed and observing that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 6DD( f )( i ) of the Income-tax Rules, 1962; and in the course of appellate proceedings against the reframed assessment, invited the attention of the CIT(A) to the submissions and findings in the earlier appellate proceedings before the CIT(A). It is also submitted that the assessee had a full proof, verifiable system of accounting of various receipts such as raw skins, consumables and chemicals and is also maintaining system of accounting from place to place from inward gate to stores and there is an inward register with regard to purchases of raw-materials and there are gate passes for dispatches which are being maintained regularly by the assessee and the same was examined and verified by the authorities from time to time. Still, the CIT(A) has confirmed the addition made in the re-assessment, merely on account of assessee s failure to furnish stock register. The failure of the assessee to file stock register is only due to lapse of time, and as such, confirmation of addition itself is not justified. Elaborate written submissions were also filed by the learned counsel for the assessee, reiterating these contentions, and also furnished gist of the ratio laid down in the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which in part a stop to practices which the Legislature considers to be against public interest. There is a heavy burden on the department to prove that assessee concealed the particulars of income or furnished inaccurate particulars. It would be perfectly legitimate to say that the mere fact that the explanation of the assessee is false does not necessarily give raise to the inference that the disputed amount represents income. It cannot be said that the findings in the assessment proceedings for determining or computing the tax is conclusive. In the present case, apart from the non-acceptance explanation given by the assessee by Assessing Officer, there were various materials assessee brought on record to prove the genuineness of the purchases. Though the assessee not produced the stock inward register or stock registers, it was admitted fact that the assessee furnished all documentary evidence to prove the purchase like bills, vouchers, as well as identity of the parties, way bills, lorry Nos., C-forms. These aspects are not doubted by the Assessing Officer. The inward register/stock register were not produced due to lapse of time. Further, the assessee explained the cash advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. There may be justification for making addition to the assessment; there was no justification for imposing penalty because the department had not established that what was added by them in the assessment represented the income of the assessee. The penalty order should be self-contained one, the findings that there has been concealment or furnishing of inaccurate particulars of income recorded in the assessment proceedings cannot automatically transferred to the penalty order and the concealment or furnishing of inaccurate particulars as specifically required to be recorded in the penalty order. Failure in this regard vitiates the validity of the penalty order itself. Findings in the assessment proceedings are not conclusive. The findings in the assessment order were only a piece of evidence which can be relied upon in the penalty proceedings but there should be independent findings in the penalty order. In this present case, the Assessing Officer not brought on record nothing more than findings record in the assessment order, as such no independent findings in the penalty order regarding the concealment of income or furnishing inaccurate particulars of income. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
