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TMI Blog2013 (11) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Appellate Tribunal on the following questions of law:- "1. Whether in law and circumstances of the case, the I.T.A.T. was justified in cancelling the penalty imposed u/s 271(1)(c) of the Income Tax Act, 1961? 2. Whether in law and circumstances of the case, the I.T.A.T. was justified in holding that in terms of Section 271(1)(iii), the quantum of concealment of income with reference to which the I.T.O.has to decide as to whether or not to obtain the approval of the I.A.C. is that which he determines on an assessee and not that which is finally determined as a result of appellate orders? 3 Whether, on the facts and in the circumstances of the case, the Ld. I.T.A.T. was justified in holding that the order of the A.A.C. could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s preferred against the said order of the A.A.C. And, as such, the addition sustained by the A.A.C. became final. 5. In the penalty proceedings, after considering the explanation submitted by the assessee respondents, the Assessing Officer had imposed penalty under section 271(1)(c) of the Income Tax Act. Penalty was cancelled by the A.A.C. inter alia, for the reasons that ordinarily penalty cannot be levied on the basis merely of an estimate of cost of construction made by the I.T.O. In that connection, he drew support from the CIT Vs. Mohd. Kunhi 87 I.T.R. 189 and C.I.T. V. Apsara Talkies, 155, I.T.R. 303 Copies of the orders of the Income Tax Officer imposing penalties in the aforesaid cases are annexed herewith as Annexure 'A' and 'A- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, in accordance with which the unexplained investment would be liable to imposition of penalty, if the assessee does not render any satisfactory explanation with regard to their nature and source in the penalty proceedings. In the present case, no new evidence has been placed on record by the assessee to dislodge the presumption of concealment raised against them on account of the difference between the assessee and the returned income in terms of the Explanation to section 271(1)(C). The material already placed on record can, of course, be re-examined with a view to find out whether the assessee's onus can be taken as having been discharged. In the present case, as we have noted above, sufficient opportunity was given to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, the quantum of unexplained investment had been reduced, as a result of the appellate Assistant Commissioner's order, to Rs.18,373/- and Rs.6,124/- respectively for the two years. But, in terms of Section 271(1)(iii), the quantum of concealed income with reference to which the I.T.O. has to decide as to whether or not he will obtain the approval of the I.A.C. is that which he determines 'on assessment', and not that, which is finally determined as a result of the appellate procedure. The relevant part of the proviso to clause (iii) of sub-section(1) of section 271 reads as below : - "Provided that, if a case falling under clause (c) the amount of income ( as determined by the Assessing Officer on assessment ) in respect of which the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Representative was given an opportunity to make his submission with regard. He was, however, not able to point out if the above view of the Allahabad High Court no more held the field. The issue is, therefore, being determined in terms of rule 11 of the Income Tax Appellate Tribunal Rules on the basis of the above flaw in the procedure followed by the I.T.O. His orders accordingly cannot be sustained. They accordingly stand quashed." 4. In the present case, we find that when ITO has initiated penalty proceedings. The quantum of concealed income was assessed at Rs.36,000/- for the year 1975-76, and Rs.37,000/- for the assessment year 1976-77. During the pendency of penalty proceedings, the assessee filed appeals against the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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