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2009 (8) TMI 69

..... dependent investigation in its own case and hence, we cancel the penalty sustained by the CIT (Appeals) Held that - the assessee had declared bogus agricultural income - . Inquiries had revealed that the assessee had not sold any agricultural produce - assessee had procured bogus bills to show sale of the agricultural produce - Cat was out of box on the culmination of inquiry and report dated 9/16.5.1995. It is only thereafter that the revised return was filed on 8.3.1996 - It is, thus, a clear case of giving inaccurate and false particulars and concealing the income. The ingredients of this provision stand fully satisfied ITAT order set aside penalty restored. - IT Appeal No. 221 of 2006 - 19-8-2009 - A.K. SIKRI and VALMIKI J. MEHTA, JJ. Ms. Prem Lata Bansal with Ms. Anshul Sharma and Mr. Paras Chaudhary, Advocates, for the Petitioner. Mr. Arun Khosla, Advocate, for the Respondent. JUDGMENT A.K. SIKRI, J. - Following two substantial questions of law were framed in this case :- (a) Whether ITAT was correct in law in deleting the penalty of Rs.2,17,268/- imposed by the Assessing Officer under Section 27(1)(c) of the Act? (b) Whether ITAT was correct in law in deleting the pena .....

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..... revision of income was made by the assessee voluntarily and the taxes were paid according to the revised return and, thus, there was no mala fide intention on the part of the assessee to conceal the income. It was also stated that because of difficulty in getting all the necessary details due to extraordinary circumstances beyond the control of the assessee, the return was revised suo motu. Therefore, there was no concealment of income and, thus, no penalty was leviable. The AO did not find any credence in the said explanation, inasmuch as, as per the AO, it is only after the initial return filed by the assessee when the extensive inquiries were made by the Directorate of Investigation to verify the assessee‟s agricultural income and statement of various persons was also recorded by the ADI (Inv.) under Section 131 of the Act that the assessee came out with the revised return. Therefore, it could not be said that it had made revision in its income voluntarily. Following discussion in this behalf is contained in the penalty order dated 29.8.1997 :- In this case, report from ADI (Inv.) Unit-V, New Delhi was received vide his letter dated 16-5-95. It was found out by the ADI (I .....

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..... x (Appeal) confirmed the penalty and dismissed the appeal vide orders dated 20.7.1998. Undeterred, the assessee approached the Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal ) by way of further appeal under Section 254 of the Act. This time, the assessee was successful as the Tribunal has reversed the orders of the CIT (A) and allowed the appeal of the assessee. Order dated 4.5.2005 passed by the Tribunal in this behalf is under challenge before us in the present appeal, which is preferred by the Revenue. 6. A perusal of the orders of the Tribunal would show that the Tribunal set aside the penalty order on two grounds :- (a) No satisfaction was required by the AO in his assessment order to the effect that the assessee had concealed the particulars of the income to avoid the tax effect. In this behalf, the Tribunal relied upon the judgment of this Court in the case of CIT v. Ram Commercial Enterprises Ltd., 246 ITR 568; and Diwan Enterprises v. CIT & Ors., 246 ITR 571. This ground, to set aside the penalty, does not hold good in view of retrospective amendment to the provisions of Section 271(1)(c), as mentioned above. (b) The Tribunal went into the merit .....

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..... se and hence, we cancel the penalty sustained by the CIT (Appeals). 7. Apart from quoting the aforesaid para, on the basis of which it is remarked by the Tribunal that the assessee deserved to succeed in this appeal, the facts of the assessee s case are not discussed at all. In these circumstances, Ms. Prem Lata Bansal, learned counsel appearing for the Revenue, made a scathing attack to the said order by submitting that the facts in the case of AFL Developers (supra), on the basis of which the penalty order was set aside, had no bearing at all and, therefore, it was neither proper nor permissible for the Tribunal to allow the appeal of the assessee based on the said case. We find this criticism of the Revenue to the judgment of the Tribunal as well founded. In the case of AFL Developers (supra), the Tribunal noted that the said assessee could not lay its hands on the relevant documents, but it felt suffocated by the absence of the auditor as it was he who had audited the accounts and it was he who must have prepared and furnished the original return and it was he who could have satisfied the assessing authorities of the questions posed by them, but the said auditor Shri S.K. Jain .....

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..... of would show that in that para the only aspect discussed is that no satisfaction, as contemplated under Section 271(1)(c) of the Act had been recorded by the AO while passing the assessment order. We are in agreement with the reason given by the AO in support of the penalty order. It is a clear case where the assessee in its original return had shown under Agricultural Income a sum of Rs.3,76,222/-, which was reduced from the total income. However, in his revised return, it accepted the fact that the aforesaid income was not agricultural income and, therefore, declared the same as taxable income. Its claim that revised return was filed suo motu is not that innocent as is projected to be. It is only after the ADI (Inv.), Unit-V inquired into the matter and found that the assessee had declared bogus agricultural income that the revised return was filed. It would be material to note that ADI (Inv.) had given his report vide letter No. 239 dated 9/16.5.1995. As per that report, the assessee had declared bogus agricultural income. Inquiries had revealed that the assessee had not sold any agricultural produce to M/s. Shiv Bhandar as claimed by the assessee in the original return. Statem .....

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