TMI Blog2013 (6) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... ataru Jewellers is not disputed and it is also fact that all the transactions in the said bills were recorded in the books of accounts of M/s Kalpataru Jewellers. As held in case of Hindustan Steels (1969 (8) TMI 31 - SUPREME Court) an order imposing penalty for failure to carry out statutory obligation is the result of quasi criminal proceedings and penalty will not ordinarily be imposed unless the party obliged under the Act has either acted deliberately in defiance of law or was guilty of conduct contumacious or acted in conscious disregard of its obligation. Penalty deleted. In favour of assessee. - ITA No.381/Hyd/2012 - - - Dated:- 17-6-2013 - Shri Chandra Poojari And Shri Saktijit Dey,JJ. For the Appellant : Shri D. Sudhakar Rao For the Respondents : Shri Rajendra Kankariya ORDER Per Saktijit Dey, J. M:- This appeal filed by the department is directed against the order dated 30-12-2011 of CIT (A)-IV, Hyderabad pertaining to the assessment year 2006-07. 2. The department has filed the aforesaid appeal on the following two effective grounds:- 1. The ld CIT (A) ought to have upheld the penalty u/s 271(1)(c) levied on account of addition of Rs.97,74,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Tribunal, Hyderabad. The assessee also filed a cross Objection before the Tribunal against the order passed by the CIT (A) sustaining the addition. 7. In the meanwhile, the Assessing Officer issued a notice for imposition of penalty u/s 271(1)(c ) of the Act. The assessee submitted its explanation strongly refuting the allegation of either concealment of income or furnishing inaccurate particulars of income so as to invite penalty u/s 271(1)(c ) of the Act. It was submitted by the assessee that there was no deliberate concealment on its part which could attract levy of penalty. The Assessing Officer did not accept the explanation submitted by the assessee and proceeded to impose penalty u/s 271(1)(c) of the Act on the entire addition made by the Assessing Officer in the assessment order, the Assessing Officer even imposed penalty on those additions which were deleted by the first appellate authority. As a result, an amount of Rs.9,46,58,443/- was imposed as penalty u/s 271(1)(c ) vide order passed on 29-3-2010 by the Assessing Officer. The assessee being aggrieved of the order passed imposing penalty preferred an appeal before the CIT (A). 8. During pendency of appeal befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the books of accounts, and therefore, they opined that the appellant's claim could not have been rejected by the Assessing Officer by holding it as an afterthought. 7.8.2 Even in respect of upholding of the addition to the extent of Rs. 97,74,968/ -, it can be seen from the order of the Hon'ble ITAT that they too a specific note of the fact that the alleged purchases made by the appellant from M/s. Kalpataru Jewellers had continuous bill Nos. 74 to 77, and had been issued during the period 24.8.2005 to 27.8.2005. They considered it to be accommodative in nature on the ground of human probabilities, as they felt that it was difficult to agree that M/ s. Kalpataru Jewellers did not have any business with any other concern during the said period, and that too a single bill in whole of the day was issued only to the appellant firm. They opined that the said transaction was quite unusual and abnormal, and appeared to be collusive. They felt that the invoices appeared to be accommodative in nature for justifying the excess stock found during the course of search. In view of these observations, the Hon'ble ITAT held that the purchases relating to 4 bills did not conform to the nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation in respect of the excess stock, and had also supported its explanation by furnishing the 8 bills under consideration. The said bills were found duly recorded in the books of accounts of the counter parties. Accordingly, even if part of the additions on this issue was upheld by the Hon'ble ITAT on the ground of human probabilities, the burden was on the Assessing Officer to separately investigate the issue in the course of penalty proceedings, and to prove that the explanation so offered by the appellant was false. However, it is not clear that during the course of assessment proceedings, nor in the course of subsequent penalty proceedings, it has been proved that the evidence furnished in respect of the excess stock was false or inaccurate. 7.8.7 From the above, it is clear that the levy of penalty even on this Issue IS based merely on the view taken regarding addition in the assessment order. However, it is an established judicial proposition, as evidenced by the decision of the Hon'ble Supreme Court in the case of Arianthrarn Veerasingaiah Co. Vs. CIT (123 ITR 457), that the findings in the assessment proceedings cannot be regarded as conclusive for he purpose of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the purchases in respect of the 4 bills ( 74 to 77 ) from M/ s. Kalpataru Jewellers, Mumbai, were against normal human behaviour and probabilities. It was felt the transaction under consideration were unusual and abnormal, and therefore, appeared to be accommodative and collusive in nature. However, it is seen that even during the course of penalty proceedings, the Assessing Officer has not brought any further evidence to prove the above conclusion, which is purely based on the peculiar facts and circumstances of the case. He has not been able to prove the inference that the said transactions were indeed of a collusive nature or that those were accommodative, and that no actual purchases had ever been made by way of the bill No. 74 to 77. In fact, nothing further has been done to establish the doubts raised in respect of the said purchased. In view of the judicial pronouncements referred to above, therefore, no penalty can be levied in respect of the addition of Rs. 1,35,40,756/- or even of Rs. 97,74,968/- finally sustained by the Hon'ble ITAT, as all of such addition is only based on preponderance of probabilities and normal human behaviour." 10. Being aggrieved of the aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actory explanation making out a case for non imposition of penalty then no penalty can be imposed only on the basis of finding made in the assessment proceedings. In support of such contention, the learned authorised representative for the assessee relied upon the case of ACIT vs. VIP Industries Ltd., (122 TTJ 289), Chempure vs. ITO (40 SOT 164) (Mum), 219 ITR 267, 102 ITR 787, Jain Garnets vs. Dy.CIT (18 TDR 358). The learned authorised representative for the assessee relying upon the decision of Hon'ble Supreme Court in case of Hindustan Steel in 83 ITR 27 submitted that order imposing penalty is a result of a quasi criminal proceedings, unless it is proved that there is a conscious and deliberate act on the part of the assessee to conceal his income or furnish inaccurate particulars of its income, no penalty can be imposed. In this regard, the assessee also relied upon the decision of Hon'ble Supreme Court in the following cases:- i) Anantharam Veerasinghiah Co. Vs. CIT (123 ITR 457) ii) Dilip N. Shroff v. JCIT (291 ITR 519) iii) UOI vs. Rajastan Spg. Wvg. Mills (2009) 180 Taxmann 609 iv) T. Ashoka Pai vs. CIT 292 ITR 11 13. We have heard contentions of the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases from Kalpataru Jewellers in respect of Bill Nos. 66 to 70 were accepted by both the CIT (A) and Income-tax Appellate Tribunal. Therefore, the addition sustained by the CIT (A) and the Income-tax Appellate Tribunal were on the basis of peculiar facts and circumstances involved considering the human probabilities. However, such confirmation of addition made in the quantum assessment proceedings would ipso facto not lead to the conclusion that the assessee has either concealed particulars of income or furnished inaccurate particulars of his income. Assessment proceedings and penalty proceedings are distinct and independent to each other. The reasoning on the basis of which additions are made in the assessment proceedings would not be enough valid for imposing penalty u/s 271(1)(c ) of the Act. In case of imposition of penalty, the Assessing Officer has to give a conclusive finding of fact that the assessee has consciously made an attempt to conceal his income or furnish inaccurate particulars of his income. Unless this fact is established on record by bringing sufficient evidence, no penalty can be imposed u/s 271(1) (c ) of the Act. As is obvious from the order passed u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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