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TMI Blog2015 (7) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... urnment on the ground that the quantum appeals are pending, accordingly the hearing of the case was adjourned to 27-04-2015. On 27-04-2015 nobody appeared on behalf of the assessee for which the hearing of the case was adjourned to 09- 07-2015 by issue of notice through RPAD which was duly served on the assessee and the acknowledgement is placed on record. When the name of the assessee was called none appeared on behalf of the assessee. It is seen from the record that nobody has appeared before the CIT(A) also for which he has passed an exparte order. Accordingly, the appeal is being decided on the basis of material available on record and after hearing the Ld. Departmental Representative. 3. Levy of penalty of Rs. 44,53,000/- u/s.271(1)(c) of the I.T. Act is the only issue raised by the assessee in the grounds of appeal. 4. Facts of the case in brief are that the assessee society filed its return of income on 31-10-2009 declaring loss of Rs. 1,26,90,560/-. The AO passed the order u/s.143(3) on 10-03-2013 after making various additions against which the assessee went in appeal. The CIT(A) vide order dated 03-11-1995 granted part relief against which the assessee as well as the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer for further verification and order. The Assessing Officer completed the order u/s 143(3) r.w.s. 254 on 20.3.2003 and in aforesaid order additions of Rs. 1,90,32,050 for sale of bagasse outside books of accounts and Rs. 9,62,150 for shortage of molasses, were made. Penalty u/s 271(1)(c) was again initiated while giving the appeal effect to the order of the ITAT. In response to the said notice u/s 271(1)(c), the appellant company requested to keep the penalty proceedings in abeyance on the ground that appeal was filed again with CIT(A)-I, Pune. The Assessing Officer kept the penalty proceedings under absence till finalization of the appeal by CIT(A)-I vide order No. Pn/CIT(A)-l/AC Cir.AN/36/03-04 dated 21.2.2005. Notice was again issued by the Assessing Officer on 17.2.2006 by the registered post but the same was returned as none received the notice. The Assessing Officer took the service as valid and decided the penalty on the materials available before him. The Assessing Officer noticed that the addition of Rs. 1,19,32,050 was for the income concealed on sale of bagasse made outside books of accounts and similarly, the another addition of Rs. 9,62,150 was for not being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relieve the revenue from the burden of proving the mensrea in certain cases as defined in different explanations introduced in this section from time to time. The explanations created rebuttable presumption of concealment/ filing of inaccurate particulars on the assessee to establish that it should not be deemed to have conceal the income or file inaccurate particulars of income. One such a deeming fiction exists under Explanation 1 to sec.. 271(1)(c). This Explanation envisages two situations-(a) first, where in respect of any facts material to the computation of total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the AO or the CIT(A); and (b) second, where in respect of any facts material to the computation of total income under the provisions of this Act, the assessee is not able to substantiate the explanation and the assessee fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by the assessee. In the first situation, the deeming fiction is triggered by the inacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examine whether the present case is covered under the main part of the provisions or under the deeming provisions of Explanation 1 of section 271(1)(c) or not. 6.3. The necessary precondition for imposition of penalty under the main provisions of sec. 271(1)(c) is that the A.O. should satisfy himself that the appellant concealed its income or furnished inaccurate particulars of income. The expression 'concealment of income1 has not been defined in the Act, but the natural meaning of the expression 'concealment' is to keep from being seen, found, observed, or discovered'. It would, therefore, follow that the expression concealment of income, in its natural sense and grammatical meaning, implies an income which is being hidden, camouflaged or covered up so that it cannot be seen, found, observed or discovered. In the present case, the Assessing Officer, has found during the assessment proceeding that the appellant has sold bagasse outside books of accounts and has no explanation for the shortage of molasses found during the scrutiny of the books. Therefore, it is apparent that the Assessing Officer has been able to fulfill the conditions prescribed in the main sec, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the law as it stood in 1968, even when there was no Explanation 4. It was held that the Explanation is clarificatory in nature. This view was again followed by the Kerala High Court in the case of CIT Vs. Rowther Bros. (1979) 119 ITR 353. Though the decision of the P&H High Court was given without considering the decision of the Kerala High Court as to the effect of the change brought about in the law in 1968 or the Explanation introduced later but this view was more or less affirmed by the Supreme Court in Prithpal Singh & Co. (2001) 249 ITR 670 (SC). However, the Supreme Court in the case of Virtual Soft System Ltd. Vs. CIT, quoted above, considered the different aspects of this issue in detail and it has been upheld that the rule of Prithpal Singh & Co.'s case should apply for years prior to A.Y. 2003-04 where there is no positive total income even after additions. This amendment brought by Finance Act 2002 was held to be prospective in nature, applicable from A.Y. 2003-04. The notes and clauses issued to claim that the amendment is clarificatory or declaratory in nature was not accepted. After this judgment of Hon'ble Supreme Court, it is now understood that no penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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