TMI Blog2014 (2) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... R For The Assessee : Shri R.R.Thakur For The Respondent : Shri J.S.Nagar ORDER T.R. Sood, Member (A) The appeal filed by the assessee is against the order dated 29.07.2011, passed by the ld. CIT(Appeals) Patiala. 2. The assessee has raised following ground of appeal: 1. That the learned Commissioner of Income Tax (Appeal) has erred in law as well as on facts in confirming the penalty amounting to ₹ 37,10,000/- u/s. 271(1)(c) imposed by the Assessing Officer which is in utter disregard of facts circumstance of the case. The Penalty is liable to be cancelled. 2. That the learned Commissioner of Income Tax (Appeal) has erred in confirming the Border of Penalty u/s. 271(1)(c) which was made after the expiry of time limit as provided in the Income Tax Act 1961. The Assessing Officer had to impose the Penalty by 31/10/1998 i.e. within the time Limit prescribed from the receipt of the Quantum order from the Commissioner of Income Tax (Appeal), where as the Penalty has been imposed on 26/02/2004 i.e. after the expiry of the said period. The order passed after the expiry of the time limit is liable to be cancelled. 3. That the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sponse to the show cause notice, it was mainly stated that Assessing Officer has not made proper enquiry and verification of the evidence available on record. It was submitted that penalty proceedings are different from assessment proceedings and assessee is entitled to submit fresh evidence during proceedings. It was further submitted that Assessing Officer has not recorded proper satisfaction. It was also submitted that penalty order has been passed beyond the limitation and therefore, same is barred by limitation. On merits, it was submitted that amount of ₹ 23,00,000/- was surrendered on the advice of the officer present during the search and Shri Dewan Chand, Managing Partner was nervous and puzzled and he made surrender without understanding the implication. Total purchase bills were not properly accounted during the search and that is why, surrender was made. In respect of the addition amounting to ₹ 43,25,000/-, it was mainly submitted that amount was received as advance from customer and combine machines were sold to these parties in the following years. In fact, some confirmations and affidavits were filed before the Assessing Officer which have not been prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment in this case was completed u/s. 144/250(6) on 27.03.1997. During the course of assessment proceedings, the AO asked the assessee to furnish evidence to prove the genuineness of these creditors. The assessee filed photocopies of bills bearing No. 1651 to 1654, 1656, 1664, 1667, 1674, 1673, 1658, 1659, 1671, 1655, 1660, 1661, 1662, 1657, 1668, 1669, 1753 and 1704. Since the assessee neither produced the original bills nor do these bills having the complete details of the purchasers, the same could not be verified. The assessee had also produced one photocopy of Registration Certificate pertaining to PSB Finance and three slips from persons namely S/Shri Bhag Singh, Iqbal Singh, Labh Singh S/o Shri Amar Singh and Balbir Chand S/o Nand Lal. All these slips had been hand written on plain paper and do not contain the full particulars of the combines allegedly sold by the appellant to these persons and in the absence of the complete address, the details of the purchases and the purchase price and the dates of the payments, these slips have no evidentiary value. It was, further, claimed that these persons sold these combines to some other persons and again there was no evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) adjudicated the issue vide para 3.5 and 3.6, which are as under: A report was called for from the A.O. in this regard who in his report No. 74 dated 04.03.2011 reiterated as follows: The only contention raised by the appellant in its written submission is that the books of account were with the Department which was allegedly seized at the time of search, due to which no documents could be produced by it during assessment proceedings as well as during penalty proceedings. Regarding assessee's contention that its books of account were with the department, it is submitted that as per para 6 of assessment order dated 27.03.1997 passed in this case by the A.O., it has been specifically mentioned that the assessee was asked to produce all the account books on the date of hearing i.e. 15.1.1996. It is further mentioned in this para of assessment order that the counsel was also required to produce books of accounts on the basis of which alleged statement of affairs had been prepared. As per further discussion in this para of the assessment order, it has been mentioned that Sh. V.K. Gupta, C.A. Counsel for the assessee when appeared on 17.02.1997 before the A.O. stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d.), CIT v. Popular Lunghi Co. (1999) 238 ITR 229 (Mad), CIT v. Jain Bros. (2001) 251 ITR 302 (Del.)]. The ground of appeal regarding limitation is also dismissed because the same is not based upon any proper reasoning. 9. Before us, ld. counsel for the assessee submitted that penalty order was time barred because the same was required to be passed within six months from the end of the month in which the order of CIT(Appeals) on quantum was received as per section 275(1)(a) of the Act. He contended that though assessee has field appeal before the Tribunal but, since same was late and had been dismissed as time barred, therefore order passed by the Tribunal should not be reckoned for the purpose of limitation. He submitted that addition of ₹ 23 lacs on account of difference in valuation of stocks and ₹ 43,25,000/- on account of cash credit was liable to be deleted if the appeal had been filed in time before the Tribunal because lower authorities had found that no regular books of account were maintained by the assessee and therefore, now penalty cannot be levied. He also submitted that addition has been wrongly confirmed under section 68 and 69 of the Act when the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated 25.6.2003. This order is stated to have been received by the Ld. Commissioner on 8.8.2003. Para 5 of the penalty order has discussed these facts in detail. It has been noted that original show cause notice for levy of penalty was issued on 5.6.1998 against which no reply was filed. Another notice was issued on 8.7.1998 against which the assessee submitted a letter dated 16.7.1998 requesting the Assessing officer to keep penalty proceedings pending till the final disposal of the appeal. Thus it becomes clear that the assessee himself requested the Department to keep penalty proceedings in abeyance till the final disposal of the appeal. As noted earlier the appeal in quantum proceedings was dismissed by the Tribunal by refusing to condone the delay. The assessee cannot take U turn and contend that the order of the Tribunal cannot be reckoned for the purpose of Sec. 275(1)(a) because this has been dismissed in limine. This is so because the assessee has himself taking a shelter on the proceedings which was pending before the Tribunal in quantum appeal. Further no distinction is made in Sec. 275(1)(a) in the order of the Tribunal passed in limine by refusing to condone the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue that even assuming that the addition of ₹ 11,027 in the income was erroneous, the assessee cannot raise this question in penalty proceedings since the reassessment order was not challenged in appeal. The answer of the assessee is that penalty proceedings are quasi-criminal in nature, that the Department has to establish in penalty proceedings that there has been concealment of income, that though the findings in the assessment order constitute evidence in penalty proceedings they are not conclusive and the matter has to be decided afresh in penalty proceedings. Therefore, it is submitted that the assessee can challenge the assessment order in the penalty proceedings. The assessee relied on the decision of the Bombay High Court in Jainarayan Babulal v. CIT (1988) 170 ITR 399. This decision relies on an earlier decision of the Bombay High Court in CIT v. Gokuldas Harivallabhdas (1958) 34 ITR 98, which is approved by the Supreme Court in CIT v. Anwar Ali (1970) 76 ITR 696. In Anwar Ali's case (1970) 76 ITR 696, the Supreme Court has indicated that the provision in question is penal in the sense that its consequences are intended to be an effective deterrent whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, hold that question No. 2 has to be answered in favour of the Revenue. Above clearly shows that penalty proceedings and assessment proceedings are independent, therefore during penalty proceedings the assessment proceedings cannot be agitated. 14. The Ld. Counsel for the assessee had relied on the decision of Hon'ble Punjab and Haryana High Court in case of Harigopal Singh Vs. CIT (supra). In that case the assessee filed return of income on estimate basis declared income of ₹ 52,000/-. The income was finally assessed at ₹ 2,07,500/- by estimating assessee's sales and gross profits, The income was revised to ₹ 1,50,000/- by the Tribunal. Against this addition penalty was imposed which was deleted by the Hon'ble High Court by observing that this is a case of estimated income, therefore penalty cannot be levied. In the case before us, the assessee had offered a sum of ₹ 23 lakhs during search which has not been included in the returned income. Similarly another sum of ₹ 43,25,000/- stated to have received from customers for which no evidence was given. Even in penalty proceedings no explanation has been given in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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