TMI Blog2011 (6) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... ct‟) is filed by the assessee against the order of the Income Tax Appellate Tribunal (for short the Tribunal‟). dated 25th January, 2008, whereby the Tribunal set aside the order of the CIT(A) deleting the penalty of Rs.10,01,684/-, levied by the Assessing Officer. This appeal is admitted on the following substantial question of law:- Whether on the facts and circumstances of the case the Tribunal was justified in reversing the order of the CIT(A) who deleted the penalty of Rs.10,01,684/- under Section 271(1)(c) of the Act? 2. We propose to dispose of this appeal and for its disposal, the facts need to be narrated for proper understanding of the issue involved. 3. A search and seizure operation was conducted at the premises of the appellant/Shri Rajiv Bhatia, Director of the assessee company and certain documents were seized, including annexures A-2, A-3 and A-10. Notice under Section 158BC of the Act for the block period i.e., assessment year 1991-1992 to 2001-02 was issued against the assessee company which filed its block return. Assessing Officer completed the assessment under Section 158 BC and inter alia made addition of Rs.14,77,410/- for the follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved that said expenditure was not debited even till 1st April, 2001 in the imprest account of Mr. Rajiv Bhatia in the books of account maintained by the assessee. The entries in this regard were made only in September, 2001 i.e., much after the date of search which took place on 4th April, 2000. While upholding the additions made by the Assessing Officer, the CIT(A) vide order dated 29th August, 2003 observed as under:- 6.4 I have considered the issue carefully. During the search operation the Director of the appellant company, Shri Rajeev Bhatia has submitted that a sum of Rs.15 to 20 lakhs have been spent on the construction of the Golden Tulip Tourist Resort outside the account books. This evidence which is spontaneous expression of truth carries much weightage. The theory of imprest account appears to be clearly an after-thought. There was nothing to prevent Shri Bhatia from stating the truth in case he was withdrawing certain amount in his imprest account and later on spending the same on the construction. The addition of Rs.11,19,832/- and Rs.3,57,577/- are therefore confirmed. 5. Both, i.e., assessee as also the Revenue, being aggrieved by the order of the CIT(A), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew, the revenue authorities were fully justified in making the aforesaid addition and their orders on this issue does not call for any interference. The same is confirmed and grounds 4 to 4.3 and 5 are dismissed. 6. After the above order dated 16th September, 2005 of the Tribunal in quantum proceedings, the Assessing Officer gave specific opportunity to the assessee in response to which written explanation dated 17th March, 2006 was filed, wherein the submissions made in the assessment proceedings were reiterated in the sense that no extra cash was found by the search party; imprest amount was given to the Director, which was spent by him; and the fact that addition had been made in the quantum proceedings, could not be a reason to leavy penalty. The Assessing Officer rejected the pleas of the assessee and maintained the penalty. Against this, matter was carried in appeal before the CIT(A), wherein specific plea was taken with respect to the non-recording of satisfaction in the block assessment order regarding leavy of penalty and it was contended that in the absence of such satisfaction, the penalty proceedings were bad. 7. The CIT(A) recorded the finding that satisfacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty which was rightly levied by the Assessing Officer The order of CIT(A) is set asdie and that of AO is restored. 9. It is against this impugned order of the Tribunal that the assessee is before us in appeal in ITA No. 622/2008. 10. The order of the Tribunal with regard to penalty as levied by the Assessing Officer, has been assailed by the learned counsel for the assessee, mainly on the ground that in the given facts and circumstances, it could not be said to be a case of concealment of income or furnishing of inaccurate particulars by the assessee. He also submitted that the primary burden of proof was on the Revenue and that satisfaction was required to be recorded by the Assessing Officer in this regard before proceedings to levy any penalty under Section 27(1)(c). Learned counsel relied upon various judgments in support of his submissions. A reference can be made to those, viz., Dilip N. Shroff v. JCIT, (2007) 291 ITR 519 (SC); Union of India v. Dharamendra Textile Processors, (2008) 306 ITR 277 (SC); CIT v. Reliance Petroprdoucts Pvt. Ltd., (2010) 322 ITR 158 (SC); CIT v. Haryana Warehousing Corporation, (2009) 314 ITR 215 (P H); CIT v. Sidhartha Enterprises, (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) This satisfaction should be arrived at during the course of any proceedings. These could be assessment, reassessment or rectification proceedings, but not penalty proceedings. (iii) If ingredients contained in (i) and (ii) are present a notice to show cause under Section 274 of the Act shall issue setting out therein the infraction the assessee is said to have committed. The notice under Section 274 of the act can be issued both during or after the completion of assessment proceedings, but the satisfaction of the Assessing Officer that there has been an infraction of clause (c) of sub-section (1) of Section 271 should precede conclusion of the proceedings pending before the Assessing Officer. (iv) the order imposing penalty can be passed only after assessment proceedings are complete. At the stage of initiation of penalty proceedings the order passed by the Assessing Officer need not reflect satisfaction vis- -vis each and every item of addition or disallowance if the overall sense gathered from the order is that a further prognosis is called for. The interrelation of additions or disallowances, if any, may be unreavelled only at the conclusion of the penalty proceedings. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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