TMI Blog1999 (12) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the Department's case under the said Explanation ? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in upholding the levy of penalty on the ground that the assessee's explanation as to the expenditure on repairs and maintenance claimed by it was not bona fide and that all the facts relating to the same and material to the computation of its income had not been disclosed by it, without appreciation of the material evidence produced by the assessee ?" The assessee is a firm. The assessee filed its return of income for the year 1990-91 on August 27, 1990, declaring a total income of Rs. 48,361. The assessment was however, completed on March 31, 1991, under section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Appellate Tribunal. A legal issue was raised by the assessee before the Income-tax Appellate Tribunal that the imposition of penalty under section 271(1)(c), by resorting to the provisions of Explanation 1 to the said section without giving notice, was illegal. It was argued that as a result of the above action on the part of the Assessing Officer, the assessee had no opportunity to meet the case of the Department. Reliance was placed on the decision in the case of P. M. Shah [1993] 203 ITR 792 (Bom). The Tribunal, on the basis of the facts of the case, came to the conclusion that there was concealment of income and upheld the imposition of penalty but directed that the computation of penalty amount be restricted to the disallowance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel for the assessee is that in the notice which has been issued there was no mention of the Explanation. It is not pointed out as to whether clause (a) is applicable or clause (b). Thus, the assessee was not in a position to submit the reply. Reliance is placed on the judgment given in the case of CIT v. P. M. Shah [1993] 203 ITR 792 (Bom) where it was considered that it is essential that the assessee must be informed that the penalty proceedings are commenced under the Explanation to section 271(1)(c). We have considered over the matter. In the copy of the show-cause notice issued, it is mentioned as to why the order imposing penalty should not be made under section 271 of the Income-tax Act, 1961. It is not the case of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question is therefore answered in favour of the Revenue and against the assessee. In respect of the second question, it is the contention of the assessee that the Tribunal without examining the material produced before the authorities below, has passed the order on the merits. In penalty proceedings, the assessee is entitled to show that he has not committed the offence and for that purpose even fresh evidence could be submitted. The evidence which was already submitted before the assessing authority and was not considered by the Tribunal was sought to be challenged by way of miscellaneous application. The Tribunal should have considered the same. In these circumstances, we feel that the matter requires re-examination by the Tribunal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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