TMI Blog2012 (6) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... against assessee. - ITA No.2543/Mum/2008 - - - Dated:- 22-2-2012 - G E Veerabhadrappa, Vijay Pal Rao, JJ. For Appellant: Shri Rajeev Khandelwal For Respondent: Dr P Daniel ORDER Per: Vijay Pal Rao: This appeal by the assessee is directed against the order dated 14.2.2008 arising from the penalty order passed u/s 271(1)(c) of the Cit(A) for the Assessment Year 1999-00. 2. The assessee has raised the following effective ground in this appeal: The following grounds of appeal are independent of, and without prejudice to, one another: 1. The Commissioner of Income-tax (Appeals), Central VII, Mumbai (hereinafter referred to as the CIT(A)) erred in upholding the action of the Assessing Officer in levying penalty of Rs 13,61,588 under section 271(1)(c) of the Act. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have confirmed the impugned penalty under section 271(1)(c) of the Act. The appellants further contend that the Assessing Officer has not initiated penalty proceedings in the order dated 3.05.2007 giving effect to the order oibL4at 22.08.06 and as such, the impugned order of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed profits 59,11,51,567/-" 3.5 Subsequently, the Assessing Officer has also passed the given effect order to the order of the Tribunal dated 19.7.2007 passed on the Miscellaneous Application of the assessee and granted relief in respect of unexplained cash credit of Rs. 6,24,83,564/-. In this way, the assessee got major relief on the issue, which were remanded back to the Assessing Officer except Rs. 38,90,250/- in respect of the addition on account of unexplained investment. The details of the additions are as under: Sl.No. Name of the client Address Amount(Rs.) 1 Aamy Shah Karamchand 11,26, 125 2 M L. Machinery Co. Pvt.Ltd. Mansion 16,38,000 3 Sonal Shah Barack Roxi, Behind Metro Cinema, Mumbai 11,26,125 38,90,250 3.6 The Assessing Officer passed penalty order dated 19.12.2007 whereby a penalty of Rs. 13,61,568/- being 100% to the tax evaded by the assessee on the addition of Rs. 38,90.250/-. 3.7 The assessee filed appeal against the levy of penalty before the CIT(A), who has confirmed the levy of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res later : 79 [ Provided that in a case where the relevant assessment or other order is the subjectmatter of an appeal to the Commissioner (Appeals) under section 246 or section 246A , and the Commissioner (Appeals) passes the order on or after the 1st day of June, 2003 disposing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year from the end of the financial year in which the order of the Commissioner (Appeals) is received by the Chief Commissioner or Commissioner, whichever is later;] (b) in a case where the relevant assessment or other order is the subject-matter of revision under section 263 79 [or section 264 ], after the expiry of six months from the end of the month in which such order of revision is passed; (c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself. In this behalf it is necessary to remember that a proviso is merely a subsidiary to main section and must be construed in the light of the section itself. It has to bed construed harmoniously with the main provision. This conclusion is fortified by the decision of the ld Judge in Rayala Corporation (supra) where it was held that in case where an appeal is pending before the Tribunal the limitation period for levy of penalty can only be as provided for u/s 275(1)(a) i.e. six months from the end of the month in which the order of the Tribunal is received by the CIT. In so far as the submission with regard to the section being read in consonance with se 275(1)(a) is concerned, we are of the opinion that the latter section which was introduced later on does not dilute or in any manner render nugatory the main provision, which can only be read to mean that the limitation period for levy of penalty, only in the case of order of the Tribunal, to be as provided under the main section and not otherwise. 11. Thus, we are of the view that the provisions of sec. 275(1)(a) of the Act does not nullify the availability to the Assessing Officer of the period of limitation of six months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty order is not sustainable because the Assessing Officer has not recorded his satisfaction while passing the giving effect order. He has further submitted that since the addition made in the original assessment order was no more in existence as the Tribunal has set aside the same and remanded the issue to the record of the Assessing Officer; therefore, in the absence of satisfaction recorded by the Assessing Officer in the giving effect order, the penalty levied u/s 271(1)(c) is not sustainable. He has relief upon the order of the coordinate Bench of the Tribunal in the case of Triumph International Finance India Ltd in ITA No.450/Mum/2008 dated 15th Sept 2010 and submitted that when the Tribunal has remanded the matter to the record of the Assessing Officer, the penalty levied with respect to the issue, which was restored back to the Assessing Officer has no leg to stand, as held by the coordinate Bench of the Tribunal in the said case. 9.1 On the other hand, the ld Special Counsel Dr P Daniel has objectged to the contention of the ld AR of the assessee and submitted that the Assessing Officer has duly recorded his satisfaction in the assessment order passed u/s 143(3) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty has been levied only after the outcome of the order of the Tribunal. Therefore, the penalty which was levied against the addition finally remains sustained and in these circumstances, the order relied upon by the ld AR of the assessee has no application. 11. In view of the above discussion, we do not find any merit in the contention of the assessee that the penalty has been levied without recording the satisfaction by the Assessing Officer. 12. On merits, the ld AR of the assessee has submitted that the addition has been sustained by the Assessing Officer because the assessee could not produce the confirmation in respect of the three parties out of 37 against which the addition was made in the original assessment. He has further contended that the Assessing Officer treated these transactions as unexplained investments, because of mismatch of clients ID in purchase and sale of shares. The ld AR has submitted that during the year under consideration, the clients ID was not at all required and only by the Circular of SEBI dated 18.7.2001, it was made mandatory to record the client s ID in the transaction of sale and purchase of shares by the share broker. He has filed a cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found correct, then the provisions of Explanation 1 to sec. 271(1)(c) is applicable and penalty levied against the assessee is justified. 13. We have considered the rival contention as well as the relevant material on record. In this case, the matter in quantum was travelled upto the Tribunal and the Tribunal remitted certain issues to the record of the Assessing Officer and thereafter the addition, which was sustained as a result of the order of the Tribunal is of Rs. 38,90,250/- towards unexplained investment. 13.1 The additions are made in respect of the transactions, which were shown by the assessee as purchase and shares on behalf of the clients but when the assessee failed to produce any record in support of its claim, the addition was sustained by the appellate authorities. Thus, the penalty was levied against the addition of Rs. 38,90,250/- on account of unexplained investment in the shares by the assessee, which was shown as purchase on behalf of the clients. 14. It is settled proposition of law as emerged from various case laws of Hon ble Supreme Court as well as High Courts that so long as the assessee has not concealed any material fact or factual information fur ..... 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