TMI Blog2019 (5) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... oncealment of income could have been rendered by the Assessing Authority in such cases. The surrender on the part of the Assessee appears to be under the coercion exercised by the Survey Authority at the time of survey or the Assessing Authority. The Assessee furnished a plausible explanation, which required an investigation and inquiry. Instead of undertaking such fair exercise, the Assessing Authority and subsequently the Appellate Authorities just imposed and upheld the penalty in question to the extent of 100% of tax on such surrendered income, which was not at all called for. The reconciliation of the accounts of the Sundry Creditors is a routine accounting practice in day-to-day business and it was a matter for scrutiny and, therefore, the explanation of the Assessee that there were some unreconciled balances only required further examination and an opportunity was to be given to the Assessee to reconcile such account balances with creditors. Such unreconciled balances could not have been added as 'income' on account of 'Cessation of Liability' to be brought to tax u/s 41 (1) and invoking of Section 41 (1) in the present case was wholly erroneous. The sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Substantial Questions of Law, on which these Appeals were admitted by a Co-ordinate Bench of this Court on 13.08.2008, are quoted below for ready reference : (1) Whether the Tribunal has failed to hold that failure on the part of Assessing Officer to record his satisfaction that the Assessee had wilfully concealed his income or had furnished inaccurate particulars so as to enable him to proceed for penalty proceedings vitiates the penalty proceedings ? (2) Is the initial burden not upon the Department to prove the concealment of income especially where the Assessee had offered sufficient explanation for show cause notice to penalty ? 3. The penalty in question was imposed by the Assessing Authority basically for two reasons viz., (i) Unvouched Expenses and (ii) Unexplained Credits. The explanation given by the Assessee before the Assessing Authority in the present penalty proceedings under Section 143 of the Act was that during the course of survey conducted at the place of business of the Assessee on 30.09.2005, the authority concerned found that certain cash expenses/unvouched expenses were shown in the Books of Accounts, relatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the Revenue supported the impugned orders passed by the authorities below. 7. The relevant portion of the order of the learned Tribunal is quoted below for ready reference : ''7. In our opinion, this case is squarely covered by Hon'ble Apex Court decision in the case of K.P.Madhusudhanan Vs. CIT (2001) 251 ITR 99. In the case of K.P.Madhusudhanan Vs. CIT, the facts of the case were that for the assessment year 1986-87, the assessee, a partnership firm, filed return of income and assessment was completed determining the total income of the assessee which included income from other sources. However, the assessee did not enter in the cash book some of the transactions on the date when purchase was made. After the assessing authority noticed the aforesaid act, the assessee offered some amount as additional income. The assessment was accordingly made treating the amount as unexplained investment. Consequently, penalty proceedings were initiated against the assessee under section u/s 271 (1) (c) of the Act. The Assessing Officer found the assessee's explanation unacceptable and imposed penalty. The appeal file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat his act of furnishing inaccurate and false particulars of income in original return was not meant for defrauding the Revenue. In the light of the aforesaid discussion and precedent, we do not find any infirmity in the levy of penalty in this regard. 8. In the result, these appeals by the assessee are dismissed.'' 8. Having heard the learned counsel for the parties, we are satisfied that the authorities below, right from the Assessing Authority, have abused their powers under Section 271 (1) (c) of the Act in the present case. The explanation furnished by the Assessee for both the additions made to the declared income in the Revised Return filed by the Assessee was a plausible explanation which required consideration at the hands of the Assessing Authority. Part of expenses, which were not at all even claimed as deduction from the profits of the Assessee, were said to have been incurred by the Assessee-the forwarding Agent- to be reimbursed by his customers. Without holding any inquiry in the matter from the said customers as to whether they were reimbursed or not, no such finding of guilty animus or concea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. The very premise on which the penalty under Section 271 (1) (c) of the Act was imposed by the Assessing Authority should have invoked the good conscience of the learned Members of the Tribunal, who should have either sent back the matter to the Assessing Authority for investigating into the affairs once again or set aside the penalty in the fair exercise of their discretion in the matter. It seems, the learned Tribunal chose to uphold the order of penalty, which was passed wholly on erroneous premises, just by citing and quoting some judgments and not giving any of their own findings. The said order of the Tribunal, therefore, cannot be sustained in the eye of law. 12. We are satisfied that the present Appeals filed by the Assessee deserves to be allowed with costs, quantified at ₹ 10,000/-, to be borne by the Assessing Authority, who passed the impugned penalty orders in the present case, namely, Mr.B.B.Rajendra Prasad, Joint Commissioner of Income Tax, Business Range VIII (I/c), Chennai-600 006 , to be paid to the Appellant-Assessee within three months from today and Compliance Report should be sent to this Court. 13. Appeals filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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