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TMI Blog2019 (4) TMI 613X X X X Extracts X X X X X X X X Extracts X X X X ..... ated that, "I was doing business of used clothes on small scale basis with retail lariwalas and hawkers since last several years (,that) I have invested about Rs. 18 lakhs as my past profit, capital savings and capital received from my father on his death in the said business in the earlier years (,that) the profit margin in the said business is very low at 3 to 4% after deducting various expenses.......(,and that) "I have also done business in F&O in the share market and there was a huge loss in my said business". In the absence of further details to substantiate these contentions, the Assessing Officer held entire deposit of Rs. 43,72,650 as his unexplained investment and brought the same to tax under section 69. The matter did not rest at that. The Assessing Officer also imposed the concealment penalty under section 271(1)(c) by treating the entire amount of Rs. 43,72,650 as income that the assessee concealed and in respect of which reasonable explanation of the assessee was not available. The explanation given by the assessee was rejected by the Assessing Officer who, inter alia, observed as follows: However, the same (explanation) is not acceptable as the assessee has not fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt was being used in respect of the same. Learned Departmental Representative has also very fairly not disputed this possibility. We have, however, also noted that even if the explanation of the assessee is to be accepted, the assessee does not have any explanation for not disclosing the reasonable profits and on the business which he stated to have carried out. As a matter of fact, his return only shows interest income and salary income. When we put it to the assessee as to why he did not disclose, going by his version, any business income, the assessee has nothing to say. In these circumstances, in our considered view, the penalty deserves to be confirmed at least to the extent of reasonable profit on turnover of the assessee reflecting by cash deposits. Thus, as against an addition of Rs. 43,72,650/- penalty to the extent relatable to addition of Rs. 4,37,265/- will certainly be justified. Learned counsel for the assessee does not also dispute this position. As regards the balance quantum addition, we find that similar deposits have been treated as deposits in the course of business, in past, and, to that extent, explanation deserves to be accepted at least for penalty purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though the option of filing the writ petitions, and thus challenging the orders of the authorities below, including this Tribunal, granting relief below the specified monetary limits, is legally available to the Revenue, Hon'ble Courts cannot lightly grant such a liberty to entertain the writ petitions as a matter of routine. It is only in a "rare and exceptional" case that such writ petitions can be entertained by the Hon'ble Courts above. 3. The "rare and exceptional cases" in which the writ remedy can be availed by the Revenue authorities are the cases in which decisions of this Tribunal can have (a) long term or cascading effect; (b) gross miscarriage of justice; or (c) such other undesirable and serious consequences. 4. The present case does not fall in any of the above categories of "rare and exceptional cases", and, for this reason, Hon'ble jurisdictional High Court did not entertain the writ petition challenging the order passed by the Tribunal. 5. Hon'ble jurisdictional High Court has thus allowed the order passed by the Tribunal, which was challenged in the writ petition, to achieve finality. 6. Their Lordships, however, did not stop at that. Their Lordships had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,72,650/- was levied u/s. 271 (1) (c) of the Act vide order dtd. 29/07/2013 2.2 Being aggrieved with penalty order assessee filed an appeal before Ld. CIT(A). The Ld. CIT(A) vide order No. CIT(A)-XVI/ITO/Wd.II(4)/1245/13-14 dtd 08.10.2014 had dismissed the appeal. 2.3 Being aggrieved assessee filed further appeal before Hon'ble ITAT. The Hon'ble ITAT vide order No. ITA No.210/Ahd/2015 dtd 22.09.2017 reduced the penalty on the ground that profit element and hence the concealment in the addition of Rs. 43,72,650/- was only 10% thereof. Since the quantum of addition made and consequently concealment of income in this case became final, it was not open to Hon'ble ITAT to adjudicate the same and determine the concealed income a fresh in an appeal against penalty order. 2.4 The petitioner humbly submits that the quantum addition of Rs. 43,72,650/- on account of unexplained cash deposit in account of assessee has attained finality. Thus, the concealed income is Rs. 43,72,650/- and this has attained finality. The tax on the said addition is also calculated and thus, the tax sought to be evaded works out to Rs. 13,00,990/- as is evident from the penalty order dt. 29.07.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(1)(c) of the Act has been reduced from 100% to 10% , the order passed by the Hon'ble ITAT-'C' Bench ITA No.210/Ahd/2015 dtd 22.09.2017 needs to be rectified accordingly. Prayer of the Department: - It is therefore, humbly prayed that:- The Hon'ble ITAT may kindly rectify the error apparent from record in the order passed on 22/09/2017 and correct the same on the basis of the facts mentioned herein above and as per law and amend the order as per law accordingly." 8. We have heard Shri Dev, learned Departmental Representative, and Shri Soparkar, learned Senior Advocate representing the assessee. We have also carefully perused the material on record and duly considered facts of the case in the light of the applicable legal position. 9. We must, at the outset, humbly bow to the observations made by Hon'ble jurisdictional High Court and state, with all humility and in all sincerity, that we have taken a careful note of what Their Lordship consider the right course of action, and we will bear in mind these observations, in letter and in spirit, in the discharge of our judicial duties. As we go along, we may have to explain what the approach of the Tribunal was b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the Tribunal, and; third, even if there be a mistake apparent on record in the order of the Tribunal that is not the kind of error which can be rectified within inherently limited scope of section 254(2). There are thus three aspects of the matter that we must address ourselves to:- (a) legal position with respect to admissibility of the present rectification petition- particularly with respect to the time limit under section 254; (b) the nature of mistake which is sought to be rectified; and (b) the scope of our powers under section 254(2) of the Act. Let us now take up these three aspects one by one. 12. So far as the limitation aspect is concerned, we find that Section 254(2), as it stands, provides, inter alia, that "the Tribunal may, at any time within six months from the end of the month in which the order was passed, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer". This time limit of six months from the end of the month in which the order has been passed is, as learned representatives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Brothers [(1971) 82 ITR 50 (SC)], as follows: .......... an error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is not a mistake apparent from the record..... 15. In this backdrop, let us look at the mistake committed by the Tribunal. The Tribunal was of the view that, so far as impugned addition of Rs. 43,72,650 was concerned, looking to the undisputed past history of the case and the stand of the Departmental Representative, these bank deposits, aggregating to Rs. 43,72,650, could be treated as business receipts but then there was no explanation for the assessee not disclosing income element embedded therein to the extent of profits, which were taken @10% of turnover- as per past case history. In effect thus, explanation of the assessee was accepted to the extent of 90% of the quantum addition of Rs. 43,72,650 and there was no explanation at all for the remaining amount of 10% of quantum addition i.e. Rs. 4,37,265. The penalty to the extent relatable to Rs. 4,37,265 was confirmed, and as regards the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he law that any and every explanation by the assessee must be accepted. It must be acceptable explanation, acceptable to a fact-finding body." 18. It is, therefore, the acceptability of the explanation of the assessee which holds the key as to whether it is a fit case for imposition of penalty, or not. The explanation was found acceptable to the Tribunal, and, to that extent, the penalty was deleted. Hon'ble High Court, however, holds this exercise to be "a way to bypass this minimum limit by suggesting that the profit element embedded in the cash deposits could be subjected to penalty" and observes that "When the proceedings of assessment in which the additions in the hands of the assessee were made, the Tribunal could not have ignored such final conclusions by simply adopting the difference mode or yardstick to judge the amount of tax sought to be evaded by the assessee". With utmost respect, we humbly bow to the observations made by Their Lordships and accept, without entering into any debate or controversy, that it was a mistake to accept explanation to the extent of a part of the amount added to the income of the assessee, on the basis of past case history, on the basis of st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d separate proceedings and merely based on the findings in the assessment proceedings, the penalty could not be levied. This approach, as we have learnt with the benefit of hindsight, is a legally unsustainable, and thus incorrect, approach in the present context but then it could not be said to be said to a glaring error which is incapable of two views being taken. We cannot join the issue on merits on what Their Lordships have held and any further analysis of legal position will inevitably take us there, and we humbly accept our mistake. We may, however, add that the school of thought that "It is settled that the findings given in the assessment proceedings would be relevant and admissible materials in penalty proceedings, but those findings cannot operate as res judicata because the considerations that arise in penalty proceedings are different from those in the assessment proceedings" has consistently found favour with several non jurisdictional High Courts, including in the case of CIT Vs Ishitiaq Hussain [(1998) 232 ITR 673 (All)]. The findings in the assessment proceedings have not thus be treated as final adjudication binding in the penalty proceedings. An approach adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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