TMI Blog2005 (2) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court. The question of the law referred by the Tribunal is as under. Whether on the facts and in the circumstances of the case. ITAT is right in cancelling the penalty under Sec. 271(1) of the I.T. Act, 1961? 2. The assessee is a registered firm carrying on business in manufacture and sale of power loom spares. For the assessment year 1985-1986, the Intelligence Wing of the Department had conducted proceedings under Sec.132 of the Act in the business premises of the assessee s sister concern, During search and seizure, the books of accounts maintained by the assessee had also been seized. While scrutinizing the seized documents, it was noticed that there was certain cash credits which were reflected in the books of accounts m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had accepted the addition of income to its return of income only to buy peace and also to give quietus to the possible litigation. 7. The revenue being aggrieved by the orders passed by the first appellate authority, had carried the matter in an appeal before the Income Tax Appellate Tribunal in ITA No.232/1991. The Tribunal after hearing the learned Counsels for the parties to the lis and being of the view that the acceptance of the assessee for the additions to be made in the return of income is only to buy peace and also to give quietus to the possible litigation, had proceeded to hold that the some cannot be construed as a concealment of income to attract Sec. 271(1)(c) of the Act. The Tribunal to come to the aforesaid conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 7,21,250/- to the return of income filed for the assessment year 1985-1986. Since there was not proper explanation the assessing authority was justified in holdings that a sum of ₹ 7,21,250/- is a concealed income and therefore, the penalty provisions are attracted. In aid of his submissions, the leaned Counsel has relied upon the observations made by a Division Bench of this Court in the case of Commissioner of Income Tax Vs. K. P. Sampath Reddy 197 ITR 232 and also the observations made by the Apex Court in the case of Union of India and Another Vs. Banwari Lal Agarwal 238 ITR 461. 11.In Re. Commissioner of Income Tax Vs. K. P. Sampath Reddy 197 ITR 232 to which we have made reference supra this Court has stated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el has relied upon the observations made by the Madhya Pradesh High Court in the case of Commissioner of Income Tax Vs. Suresh Chandra Mittal 241 ITR 124, which decision has been approved by the Apex Court in the case of Commissioner of Income Tax Vs. Suresh Chandra Mittal 251 ITR 9. 14. In the case of Commissioner of Income Tax Vs. Suresh Chandra Mittal 241 ITR 124, the Madhya Pradesh Court is of the view that, if for any reason, the assessee has offered to make appropriate additions in the return of income filed before the authorities, that concession made cannot be construed as concealment of income by the assessee and therefore, would not attract penalty provision under Sec.271(1)(c) of the Act, The Madhya Pradesh for arriving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quasi-criminal offence. But it was because of the view taken in this and other judgments that the Explanation to Section 271 was added. By reason of the addition of that Explanation, the view taken in this case can no longer be said to be applicable. 17. Keeping in view the fact situation and the case law cited by the learned Counsels for the parties to the lis before us, we have carefully perused the order passed by the assessing authority dated 30.3.1989 levying penalty under Sec. 271(1)(c) of the Act. It is an admitted fact that after the search and seizure in the sister concern of the assessee in the present case, the books of accounts maintained by the assessee had also been sized and there was certain credit entries made and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istinguishing Sir Shadilal Sugar and General Mills Ltd. s case [1987] 168 ITR 705, and after noticing the Explanation appended to Sec.271 of the Act, had held that if an addition is made and if there is no proper explanation for such addition, it would amount to concealment of income and the authorities under the Act are justified in levying penalty under Sec.271(1)(c) of the Act. 19. In view of the law declared by the Apex Court in the case of K. P. Madhusudadnan Vs. Commissioner of Income Tax 251 ITR 99, we are of the opinion that the question of law referred for our opinion requires to be answered in the negative. 20. In view of the above, the question of law referred by the Tribunal is answered in the negative i.e in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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