TMI Blog1992 (11) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 of the Income-tax Act, 1961 and proceedings under section 147 are against the law. Any proceedings taken including the imposition of the impugned penalty of Rs. 156,201 in consequence of an illegal notice under section 147 are against the provisions of law. " 3. Penalty proceedings are separate and distinct and the assessee had every right to challenge the legality of the assessment during the penalty proceedings. 4. The learned CIT(Appeals) was not justified to remark that the Explanation to section 271(1)(c) applied. 5. The learned CIT(Appeals) failed to appreciate that when the entire commission income was shown in the audited P L A/c and the Balance-sheet, as prepared by the auditors of the company, there was any question of submitting inaccurate particulars of income. 6. The learned CIT(Appeals) had erred in remarking that the question of Amnesty Scheme does not come into operation since it was the return filed by the assessee under the Amnesty Scheme on the basis of which assessment was made and the penalty has been imposed on the basis of the income so assessed. 7. The order of the learned CIT(Appeals) is erroneous both on law and on facts and the penalty up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n computing the income from money-lending business in respect of the premises in which he was carrying on money-lending business. She was living in the same premises and so the ITO disallowed the whole amount claimed. The AAC allowed partial deduction and at the same time imposed penalty under section 271(1)(c) for concealment. The Tribunal cancelled the penalty on the ground that such disallowance did not amount to concealment and it did not attract the provisions of penalty under section 271(1)(c). Although in the said case it was a question of reference of law, but indirectly suggests that the Hon'ble High Court was not averse to the finding arrived at by the Tribunal. In our opinion, too when the assessee had claimed the entire expenditure to be the part of the office, then holding that part of it was not allowable as if occupied by one of the Directors cannot be said to be concealment. It can at the most be said to be a difference of opinion between the assessee and the Assessing Officer. We, therefore, hold that no penalty on such disallowance was imposable. 7. The only ground which remains is the agency commission. As the fact stand, the assessee had supplied certain mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT [1976] 105 ITR 627 (Ker.), CIT v. Chanchani Bros. (Contractors) (P.) Ltd. [1986] 161 ITR 418 (Pat.) and CIT v. Simplex Concrete piles (India) (P.) Ltd. [1989] 179 ITR 8 (Cal.). He has, thus, stressed that, in fact, the said income had not accrued to the assessee during the year. Hence there was neither any concealment of income and nor filing of inaccurate particulars which could attract the penal provisions of section 271(1)(c). 10. On the other hand, the learned D.R. has very vehemently opposed the said arguments and stressed that the very filing of revised return by the assessee and thereby depositing the tax on the alleged income of 20% commission amounted to conceding the fact that the assessee had either concealed the income or filed inaccurate particulars. He has relied for the proposition on the decision of the Hon'ble Allahabad High Court in the case of CIT v. M. Habibullah [1982] 136 ITR 716 and of Hon'ble Kerala High Court in the case of CIT v. Gates Foam Rubber Co. [1973] 91 ITR 467. 11. We have heard the parties at length and have also carefully perused the entire facts on record. The learned CIT(A) has confirmned the penalty on the ground that although the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verification of the satisfactory conclusion of the work pertaining to the said amount, the said amount could not be included in the income of the assessee for the year in which the amount was not paid. 13. The Hon'ble Calcutta High Court too in the case of Simplex Concrete Piles (India) (P.) Ltd. had held that having regard to the terms and conditions of the contract, it could not be held that either 10% or 5%, as the case may be, being retention money, became legally due to the assessee on the completion of the work. Only after the assessee fulfilled the obligation under the contract, the retention money would be released and the assessee would acquire the right to receive such retention money. Therefore, on the date when the bills were submitted, having regard to the nature of the contract, no enforceable liability accrued or arose and accordingly it could not be said that the assessee had any right to receive the entire amount on the completion of the work or on the submission of the bills. The assessee had no right to claim any part of the retention money till the verification of the satisfactory execution of the contract. The order of the Tribunal was upheld by the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X
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