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TMI Blog2018 (1) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009-10 the assessee was engaged in a business of manufacture and supply of electrical items. It filed its return of income disclosing nil income. Subsequently, on 02.12.2013 the assessee was subjected to survey operation under Section 133A of the Act. In the course of that survey, audited balance-sheet alongwith some other documents, books of account, computer hard-disk etc. referable to A.Y. 2009-10 were impounded. Occasioned by the aforesaid survey, assessment proceedings for the A.Y. 2009-10 were taken up under scrutiny procedure under Section 143 (3) of the Act. The assessing officer considered the documents etc. discovered during the course of aforesaid survey proceedings and proceeded to reject the books of account to the assessee, under Section 145 of the Act. As to the estimation of the income, it is an admitted case between the parties that the assessing officer relied upon the particulars and details furnished/disclosed by the assessee in respect of its income for the A.Y. 2009-10. Thus, in the assessment order, the assessing officer first recorded that the assessee had disclosed it's gross income at Rs. 40,68,40,912/- and further disclosed it's total income u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax reported in (2013) 357 ITR 514 (All) wherein this court had found that the income had been assessed on estimate basis after rejecting the books of account of that assessee under Section 145 of the Act. This Court had deleted the penalty following the judgement of the Supreme Court in the case of CIT Vs. Reliance Petroproducts P. Ltd. reported in (2010) 322 ITR 158 (SC) and another earlier division bench judgment of this Court in the case of CIT Vs. Arjun Prasad Ajeet Kumar reported in (2008) 214 CTR 355 (All). Thus, essentially it appears that the penalty had been deleted as it was found to have been imposed on a presumption as to concealment in respect of income estimated by the assessing officer. No material, evidence or independent reasoning had been recorded/relied upon in the penalty order while imposing that penalty. Coming back to the facts of the present case, we find that other than the conclusion recorded by the assessing officer in the penalty order that the assessee had concealed his income and furnished inaccurate particulars of income, there is no fact or material or reasoning on the basis of which such conclusion had been drawn. Merely because the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ist. The fact that the assessing officer has recorded his finding as aforesaid, it has to be said that there is no satisfaction of the assessing authority as to existence of any one of the aforesaid two alternate pre-conditions for imposition of penalty. If an assessee is found to have concealed particulars of his income, he cannot be at the same time be alleged to have furnished inaccurate particulars of his income. In this regard, reliance has also been placed on the judgment of Gujarat High Court in C.I.T. Vs. Manu Engineering Works reported in (1980) 122 ITR 306 (Guj) as followed in New Sorathia Engineering Co. Vs. C.I.T. reported in (2006) 282 ITR 642 (Guj). Having considered the arguments so advanced, we note neither the assessing officer gave any reason how the books of account etc. impounded during the survey brought out the fact of concealment of income nor he established how such books of account etc. rendered the regular books of account maintained by the assessee unworthy of acceptance. However, it is a fact that he rejected the regular books of account of the assessee. Rejection of books of account may arise in various circumstances. It is a matter having direct beari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee with such material the assessee makes a surrender. However, such is not the case here. According to the assessing officer himself (as per the assessment order) nothing incriminating was discovered during the survey. Then, if the assessing officer has relied on the self same material and also estimated the income of the assessee at virtually the same quantum as disclosed by the assessee. The penalty order does not disclose any independent or other reasoning to prove the allegation of concealment of income and/or furnishing of inaccurate particulars of income. In fact, the assessing officer has not even made any distinction between the two contingencies. He had merely reiterated the language of the statute while concluding that "the assessee has concealed it's income and furnished inaccurate particulars of it's income" without giving reasoning to establish either of the two conditions that may invite imposition of penalty under Section 271(1)(c) of the Act. In this regard, we find the Gujarat High Court had in the case of CIT Vs. Manu Engineering Works (supra) held as under:- "We find from the order of the IAC, in the penalty proceedings, that is, the final conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, the assessing officer has not given any reason as to how he reached the conclusion that "the assessee has concealed it's income and furnished inaccurate particulars of it's income". Merely because, the books of account had been rejected it did not in itself establish or prove either of the two circumstance to levy penalty, leave alone both circumstances as the penalty order suggests. The assessing officer, was obliged to reason and state in the penalty order how according to him the assessee had either concealed the particulars of his income or had furnished inaccurate particulars of the same either with reference to the material discovered during the survey proceedings or otherwise. In view of the peculiar facts of this case where the assessing officer had not given any cogent reason in support of conclusion drawn by him to impose penalty, the Tribunal has correctly deleted the penalty relying on the earlier division bench judgement of this Court that rejection of books of account did not automatically lead to the conclusion of concealment or submission of inaccurate particulars of income. In view of the peculiar facts of this case, the question of law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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