TMI Blog2002 (11) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... IAN., K. RAVIRAJA PANDIAN. JUDGMENT The judgment of the court was delivered by K.RAVIRAJA PANDIAN J.- Pursuant to the order of this court dated July 8, 1997, made in T.C.P. No. 180 of 1996, the Income-tax Appellate Tribunal, C Bench, Madras, stated the case and referred the following questions of law for the opinion of this court. The questions referred to are as follows: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling the penalty levied under section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 1980-81? and 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in failing to appreciate the fact that the assessee's acceptance of the income assessed was not a voluntary one?" The facts of the case are as follows: For the previous year ended on March 31, 1980, with reference to the assessment year 1980-81, the assessment was completed ex parte on February 28, 1983, since the assessee failed to file his return within the time allowed under section 139 of the Income-tax Act, determining the assessee's income at Rs. 14,076. The assessee filed the return on Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egating to Rs. 1,50,000 for assessment at the assessment stage and withdrawal of the appeal relating to loan amount of Rs. 5,03,110 before the Commissioner of Income-tax (Appeals) amount to admission and thus the assessee has concealed the particulars of income. On that basis, the Assessing Officer levied penalty in a sum of Rs. 3,21,510 under section 271(1)(c) of the Act. On appeal by the assessee, as per the statement of case (the order of the Commissioner of Income-tax (Appeals) in penalty proceedings was not made available to us.), the Commissioner of Income-tax (Appeals) held that there was concealment only in respect of two counts, viz., (1) the alleged loan aggregating to Rs. 5,03,110 from Century Investment Corporation, and (2) unexplained investment of Rs. 15,000 in jewellery. Accordingly, the Commissioner of Income-tax (Appeals) directed to delete the penalty levied in respect of the low drawings and the understatement of lease rent from Odeon Theatre. The assessee questioned the order of the Commissioner of Income-tax (Appeals) before the Tribunal. The Tribunal following the decision of the Supreme Court in Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer on assessment) in respect of which the particulars have been concealed or inaccurate particulars have been furnished exceeds a sum of twenty-five thousand rupees, the Income-tax Officer shall not issue any direction for payment by way of penalty without the previous approval of the Inspecting Assistant Commissioner: Explanation 1.--Where in respect of any facts material 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 Income-tax Officer or the Appellate Assistant Commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate, 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 subsection, be deemed to represent the income in respect of which particulars have been concealed: Provided that nothing contained in this Explanation shall apply to a case referred to in clause (B) in respect of any amount added or disallowed as a result of the rejection of any explanation offered by such person, if such explanation is bona fide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 271(I)(c) has been just brushed aside by the Assessing Officer on the simple ground that the explanation offered would not come within the purview of the Amnesty Scheme. The Commissioner of Income-tax (Appeals) also, as stated in the statement of case, has held that there was concealment only on two counts, viz., (1) in respect of alleged loan aggregating to Rs. 5,03,110 from Century Investment Corporation and (2) unexplained investment of Rs. 15,000 in jewellery and passed an order directing to delete the penalty in respect of low drawings and understatement of lease rent from Odeon Theatre. There is absolutely no finding whatsoever from the authorities concerned, as contemplated under the Explanation and in the proviso that the explanation offered was false or the explanation had not been substantiated by the assessee and as to whether the explanation offered is bona fide or not as stated in the proviso to the Explanation. The Tribunal though granted the relief in favour of the assessee, by relying on Shadilal Sugar's case [1987] 168 ITR 705 (SC), has not appreciated the matter in the perspective as stated in the Explanation, but however carne to a conclusion, correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded to section 271 has not been considered in that case. Hence, the said case cannot have any impact on the decision arrived at in this case. The assessee, did not challenge the addition in the assessment proceedings as the assessee was pursuing the Amnesty Scheme, though it was found later that the Amnesty Scheme was not applicable. As far as the penalty proceedings are concerned, the assessee has offered the explanation, and the Assessing Officer has not considered the explanation, but proceeded with the matter and levied penalty on the basis that the assessee had agreed to the addition in the assessment proceedings. The Assessing Officer, as fairly admitted by learned senior standing counsel for the Revenue, has not considered the applicability of Explanation 1 to section 271(1) of the Act and given a finding regarding the same. Admittedly, clause (A) of Explanation 1 to section 271(1) of the Act is not applicable as the explanation given by the assessee was not found to be false. The Assessing Officer has also not considered clause (B) of Explanation 1 to section 271(1) of the Act and recorded a finding that the assessee is not able to substantiate his explanation and also fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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