TMI Blog2011 (5) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... the partnership firm of M/s. Gallaria June 1st, wherein the assessee is a partner, similar penalty under identical circumstances imposed by the Revenue had been deleted by the Income-tax Appellate Tribunal - Decided in favour of the assessee - 1579 of 2010 - - - Dated:- 23-5-2011 - SIKRI A. K., MEHTA M. L., JJ. JUDGMENT A. K. Sikri J.- 1. This appeal was admitted on the substantial question of law whether the Income-tax Appellate Tribunal was correct in law in deleting the penalty imposed by the Assessing Officer under section 271(1)(c) of the Income-tax Act, 1961. The aforesaid issue has arisen for consideration in the following factual backdrop. 2. For the assessment year 2004-05, the assessee herein who is a partner of M/s. Gallaria June 1st. During the assessment proceedings, the assessee was confronted with some stocks comprising various carpets and durris lying at the premises. It may be noted that a search was carried out at the premises of the assessee on January 16, 2004, and at the same time, stock registers were verified which showed opening stock of 3290 of various carpets and durris. However, the stock registers for the financial year 2003-04 reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocumentary evidence was not even adverted to and dealt with by the Assessing Officer while passing the penalty order. It was impressed upon by the assessee before the appellate authority that penalty proceedings were altogether different and independent of the quantum proceedings and it was the right of the assessee to show that there was no concealment or deliberate misstatement of the part of the assessee which warranted any penalty to be imposed by him. The Commissioner of Income-tax (Appeals) found, and rightly so, that the Assessing Officer had not dealt with the defence put forth by the assessee as noted above and merely on the basis that the assessee had surrendered the income during the quantum proceedings, the Assessing Officer jumped to the conclusion that there was concealment on the part of the assessee and rushed to impose the penalty. Thereafter, the Commissioner of Income-tax (Appeals) went into the documents which were submitted by the assessee and on that basis recorded the finding that the assessee had been able to show that there was no deliberate concealment of income on the part of the assessee and, therefore, the imposition of penalty was not justified. The de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been an afterthought. However, it has been stated that there is enough evidence to show that services were in fact provided by each of them. The Assessing Officer's observation that such instant arrangements represent diversion of income does not appear to be based on any proper reasoning or basis. It appears to be a mere suspicion on the part of the Assessing Officer. Ultimately, the issue boils down to the fact that the Assessing Officer has not elaborated on any cogent reason for being not satisfied with the explanations furnished by the appellant with regard to the necessity or justification or receiving and making deliveries on approvals. It is seen that the appellant offered this explanation in respect of the state of affairs along with all available evidence to substantiate his explanation. On the other hand, the Assessing Officer has not discussed any cogent argument for rejecting the appellant's explanation nor has he brought any thing on record to show that the appellant's explanation is false or that the appellant has concealed his income. The Assessing Officer has not made out a case that the appellant has claimed any fictitious expenses on the basis of any incrimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld the order of the Commissioner of Income-tax (Appeals). The position is summarized as under by the Income-tax Appellate Tribunal in the impugned order : "We have considered the rival submissions. We have also perused the material on records. A perusal of the assessment order clearly shows that the assessee had made surrender and the surrender has been accepted by the Assessing Officer without doing any further verification. Further, in the course of penalty proceedings the assessee has given detailed explanation. The assessee has brought evidence on record to substantiate the case of the assessee that the surrender itself was not called for and that the carpets were taken on approval basis. These evidences as furnished by the assessee, as also the explanation as given by the assessee has nowhere been disputed by the Assessing Officer. In fact the Assessing Officer has levied the penalty without even making any comment on the explanation given by the assessee much less even without whispering about the falsity of the explanation. The Assessing Officer has gone on the presumption that the assessee himself agreed to the surrender on his own sweet will and consequently, penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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