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TMI Blog2016 (3) TMI 862X X X X Extracts X X X X X X X X Extracts X X X X ..... argumentative in nature. In brief, the grievance of the assessee is that the learned CIT(A) has erred in confirming the penalty of Rs. 2,14,152/- which was imposed by the Assessing Officer u/s. 271(1)(c) of the Income-tax Act. 3. The brief facts of the case are that the assessee is engaged in manufacturing and trading of Rolls etc. Machinery Parts. It has filed its return of income on 28.12.2006 declaring total income at Rs. 2,53,076/-. An assessment order was passed u/s 143(3) on 04.12.2007 determining the total income at Rs. 2,76,980/-. On perusal of the assessment records, the learned Commissioner has harboured a belief that the assessment order is erroneous and prejudicial to the interest of Revenue; therefore, action u/s 263 of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise duty. The Excise Authorities have worked out such invoice value at Rs. 15,69,724/-. This invoice value has been arrived at on the basis of certain noting made by the employees. The acceptance at the end of the assessee for payment of excise duty would not automatically authorize the Assessing Officer to visit the assessee with the penalty. The Assessing Officer in the original assessment proceedings verified the books of accounts of the assessee and did not make any addition. In the set aside assessment order, the Assessing Officer has simply relied upon the information collected from Excise Authorities, but did not examine the material collected by the Excise Authority himself. Thus, according to the learned Counsel for the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial to the computation of the total income of any person under this Act, (A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner(Appeals) or the CIT to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of Clause (c) of this sub- section, be deemed to represent the income in respect of which particulars have been concealed". 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee fails to prove that such explanation is bona fide and that the assessee had disclosed all the facts relating to the same and material to the computation of the total income. Under first situation, the deeming fiction would come to play if the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the Assessing Officer or the Learned CIT(Appeals) by giving a categorical finding to the effect that explanation given by the assessee is false. In the second situation, the deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to the computation of total income and in addition to this the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of information collected from Excise Authorities. The nature of that information has never been analyzed for the purpose of making addition to the income of the assessee. That type of evidence cannot be relied upon for the purpose of visiting the assessee with penalty. The degree of evidence ought to be of a little higher standard, because the penalty proceedings could expose the assessee with prosecution also. Merely the assessee did not dispute with Excise Authorities does not mean that, in case of penalty proceedings if it challenges the very basis of addition, it will be denuded from his rights to challenge the nature of evidence. In our opinion, the evidence relied upon by the Assessing Officer does not falsify the explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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