TMI Blog2010 (2) TMI 973X X X X Extracts X X X X X X X X Extracts X X X X ..... A. No. 745/Ahd/2003 while upholding the levy of penalty on the amount of Rs.3,60,300 on account of investment allowance in the absence of any explanation before the Assessing Officer/the learned Commissioner of Income-tax (Appeals), set aside the order imposing penalty with regard to addition of Rs. 6,48,000 on account of stock on the ground that the hon'ble High Court vide their order dated January 27, 2003 expunged paragraph 11 of the order dated November 27, 2001 of the Income-tax Appellate Tribunal in quantum appeal in the following terms : "We may observe that we do not subscribe to the observations made in paragraph 11 of the order by the Tribunal against the chartered accountant in respect of his conduct which, even, as per learned counsel for the Revenue, were unnecessary for deciding the matter." Consequently, the Assessing Officer allowed fresh opportunity of hearing and in response the assessee vide letter dated October 13, 2006 reiterated that addition was made on account of clerical mistake in calculating and preparing detailed stock statement of raw material. However, the Assessing Officer did not accept the explanation of the assessee on the ground that the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CIT v. Valimkbhai H. Patel [2006] 280 ITR 487 (Guj), Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC), CIT v. Subhash Trading Co. [1996] 221 ITR 110 (Guj) ; 86 Taxman 20, CIT v. Rahuljee and Co. [2001] 250 ITR 225 (Delhi), CIT v. Dhoolie Tea Co. Ltd. [1998] 231 ITR 65 (Cal), K. C. Builders v. Asst. CIT [2004] 265 ITR 562 (SC), Dilip N. Shroff v. Joint CIT [2007] 291 ITR 519 (SC) and National Textiles v. CIT [2001] 249 ITR 125 (Guj). The assessee added that there was no mens rea on the part of the assessee as the addition to the closing stock even after being upheld in the quantum proceedings will be tax neutral. After considering these submissions, the learned Commissioner of Income-tax (Appeals) concluded as under : "2.3 I have considered the submissions of learned counsel and facts of the case. The penalty in this case was levied by the Assessing Officer after the addition was not only confirmed but had severe observation against the appellant and its chartered accountant. The hon'ble Gujarat High Court did not agree with the observation against the conduct of the chartered accountant and therefore the observation of the hon'ble Income-tax Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial. The same is not based on facts and therefore cannot be adjudicated. As regards the wrong mention of the assessment year in the demand notice, the same is covered under the provisions of section 292B and such mistakes do not invalidate the order. As regards the appellant's objection that the prior approval from higher authorities is not mentioned in the order. The penalty order was passed originally with the approval. The present order is in consequence to the directions of the hon'ble Income-tax Appellate Tribunal given to the Assessing Officer. In any case, the approval taken need not be mentioned in the order and that does not make the order legally weak. The order was set aside with a specific purpose for considering the observation of the hon'ble Gujarat High Court the same cannot be considered as set aside in general and therefore again going into the merits of the addition and levy of penalty, etc., may not be required. The decisions relied upon by the appellant were gone through. None of them applied to the facts of the appellant's case since the explanation offered by the appellant to explain the discrepancy in stock was found to be perverse. In none of the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferential and that the same is not based on the facts and therefore cannot be adjudicated. However, in somewhat similar circumstances, when a penalty order had been set aside by the Appellate Assistant Commissioner, the hon'ble Rajasthan High Court in the case of CIT v. Shiv Das Sire Mal [1989] 175 ITR 546 (Raj) held that (page 548) : "An order imposing penalty under section 271 is appealable to the Appellate Assistant Commissioner under section 246. Assuming that remand could be validly made under section 251(1)(b), as claimed by the Revenue, the limitation prescribed under section 275(a)(ii) for making an order imposing penalty is six months from the end of the month in which the order of the Appellate Assistant Commissioner is received by the Commissioner, which is admittedly the period which expired later in the present case. It is also an admitted fact that the Income-tax Officer's fresh order imposing penalty passed on March 30, 1979, was made after the expiry of this period of six months prescribed under section 275(a)(ii). This being so, the Income-tax Officer's order imposing penalty passed on March 30, 1979, was barred by limitation prescribed under section 275 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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