TMI Blog2003 (12) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... he quantum of sales, yet it had never bothered to file the return of income in the normal course. Firstly the Income-tax Officer had not made this fact as the basis for levy of penalty, nor was this ever raised or discussed by any party at any stage of the hearing of the appeal. Thus the observations contained in Para No. 10 having been recorded without discussion at the time of appeal are contrary to the principle of equity and natural justice. Secondly, the return is to be filed voluntarily not on the basis of sales, but on the basis of income and as per the assessee it had no taxable income and as such there was no question of filing any voluntary return. Thirdly the delay in filing of the return is an independent default, for which a separate penalty has been provided. Fourthly the observations that 'it never bothered to file the return of income in the normal course' is without any basis. (iii) Similarly as per the discussion in para (ii) the observations in para 11 that the assessee had scant regard for its obligations in complying with the provisions of the Income-tax Act is erroneous. (iv) In para No. 13 it has been stated that the assessee had furnished no evidence in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer levying the penalty had neither invoked the Explanation 1(B) nor had even recorded a finding that the explanation offered by the assessee had not been substantiated. The Commissioner of Income-tax (Appeals) had upheld the penalty for 'proven and admitted concealment.' (vii) The argument of the assessee that the Assessing Officer had not been able to make out a case for any specific default under section 271(1)(c), has not been considered. It had been pointed out that the addition of Rs. 3,00,000 had not been termed as 'concealed income' in the assessment order. After making various additions the Assessing Officer had incorporated the following line at the end of the order: 'Penalty proceedings under section 271(1)(c) have been initiated.' It was further pointed out that this observation was not related to any particular item of addition. Further the attention had been drawn to para 7 of the penalty order, in which the Income-tax Officer had observed that 'the assessee had consciously concealed particulars of income or had furnished inaccurate particulars thereof. He had again observed that 'the assessee had concealed particulars of the income or furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the learned representative of the assessee to interpret the order passed by the Tribunal to show that the order passed is incorrect yet these submissions of the assessee do not point out any specific mistakes in the order of the Tribunal. The observations made by the Tribunal in paras 10, 11, 13, 14 and 16 are based on the material available on record and on the interpretation of the provisions of section 271(1)(c) as applicable to the facts of the case and as such there is no mistake in the order of the Tribunal as alleged by the assessee in paras (ii) to (vi) of the Misc. Application. 5. However, it is a fact that while passing the order the Tribunal has not dealt with argument of the assessee as mentioned in paras (vii) and (viii) of the Misc. Application, which were based on the authority of Hon'ble Gujarat High Court in CIT v. Manu Engg. Works [1980] 122 ITR 306 and K.M. Bhatia (Quarry) v. CIT [1992] 193 ITR 379 as well as the decision of Ahmedabad Bench of the Tribunal in Navinbhai M. Patel v. ITO [1988] 27 ITD 411. The plea of the assessee was that the Assessing Officer had not made out a case for any specific default under section 271(1)(c). It was argued that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1-4-1976, which is factually not correct. We propose to deal with these authorities and the arguments of Sh. N.K. Sud, Advocate, in the following paragraphs. 7. The argument of Sh. Sud, which is based on the authority of Hon'ble Gujarat High Court in the case of Manu Engg. Works is that the language used in section 271(1)(c) contemplates two fact situations (i) where the assessee has concealed the particulars of its income and (ii) where the assessee has failed to furnish correct particulars of his income. According to Sh. Sud, while the first situation proceeds on the ground that particulars of income have not at all been furnished, the latter proceeds on the footing that such particulars had not doubt been furnished by the assessee but the same were found inaccurate. According to Sh. Sud, both these fact situations could not run together and are mutually exclusive. According to Sh. Sud the language of 'and/or' may be proper in issuing a notice for a penalty order but it is incumbent upon the Assessing Officer to come to a positive finding as to whether there was concealment of income by the assessee or whether inaccurate particulars of such income had been furnished by him. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his argument was not raised and the learned first Appellate Authority has upheld the penalty order by rejecting the argument of the assessee that Sh. P.L. Sharma, Accountant of the assessee, was not authorised to agree to any addition and the learned First Appellate Authority held that once the assessee has agreed to the addition he cannot be aggrieved with that and accordingly the learned First Appellate Authority confirmed the levy of penalty. 11. Thus, it is clear that the Assessing Officer as well as the learned First Appellate Authority have no occasion to consider or deal with the argument of Sh. Sud that the Assessing Officer while levying the penalty has not come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by it. However, this being a legal argument could be raised even for the first time before the Tribunal, but before appreciating the above argument certain factual details are necessary namely (i) the notice issued by the Assessing Officer under section 274 read with section 271(1)(c) dated 31-1-1984, on the basis of which the penalty proceedings under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xempt and is not covered in the addition of Rs. 3,00,000 in the trading account, but the assessee is at liberty to agitate this point in appeal before the Appellate Authorities. Even otherwise, it is a matter of fact that the assessee had agitated the quantum addition of Rs. 3,00,000 before the CIT(A) as well as before the Tribunal, but was unsuccessful as mentioned in the body of order of the Tribunal dated 9-10-1992 and as such there is no merit in this argument of Sh. N.K. Sud, Advocate. 14. Accordingly, the order of the Tribunal dated 9th October, 1992 is modified to the extent that instead of the appeal filed by the assessee being dismissed it is considered to have been restored back to the file of the learned First Appellate Authority for fresh adjudication in the light of our observations given above and the appeal filed by the assessee is allowed for statistical purposes only. 15. In the result, the Misc. Application filed by the assessee is allowed as above. Per S. Grover, Judicial Member 16. I have carefully gone through the proposed order of my learned brother Shri R.K. Bali, Accountant Member, in relation to M.A. No. 41(ASR)/1992 arising out of ITA No. 713(ASR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and in the circumstances of the case, the proposed order of the Accountant Member restoring the case to the CIT(A) for fresh adjudication, can be said to be justified or the Judicial Member's approach that the M.A. merits rejection on all counts is correct?" 2. The Amritsar Bench constituted by the Hon'ble Shri S. Grover, Judicial Member and Hon'ble Shri R.K. Bali, Accountant Member decided the aforesaid appeal being ITA No. 713 (ASR)/1987 vide order dated 9-10-1992 in which the penalty of Rs. 2,16,000 levied under section 271(1)(c) for the assessment year 1978-79 was confirmed. Thereafter, the assessee submitted an application under section 254(2) dated 14-12-1992. In the said application, the assessee has pointed out various alleged mistakes in the above referred order passed by the Tribunal. Those alleged mistakes have been enumerated in paras 2(i) to (viii) of the said application. 3. The learned Accountant Member has reproduced the contents of M.A. containing all the aforesaid alleged eight mistakes in the order passed by the Tribunal, in para 2 of the order proposed in the said M.A. Thereafter, the learned Accountant Member in paras 3 and 4 has observed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000 in appeal. In case the addition had been made on account of specific income found to have been concealed, there was no need to debar the assessee from challenging the addition in appeal. This aspect of the matter has also not been disposed of." 4. The learned Accountant Member has discussed the facts and submissions made by the learned counsel appearing on behalf of the assessee in relation to the aforesaid two mistakes mentioned in paras (vii) and (viii) in paras 5 to 13 of the proposed order. He has thereafter given the following findings in para 14: "14. Accordingly, the order of the Tribunal dated 9th October, 1992 is modified to the extent that instead of 'the appeal filed by the assessee being dismissed' it is considered to have been restored back to the file of the learned First Appellate Authority for fresh adjudication in the light of our observations given above and the appeal filed by the assessee is allowed for statistical purposes only." 5. The learned Judicial Member has observed in para 16 of the proposed order that he is unable to agree that the Tribunal's order dated 9-10-1992 by which the assessee's appeal came to be dismissed, be modified to the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No specific finding with reference to the judgments referred to in para (vii) of M.A. appears to have been given, which have been admitted by the author of this order, Hon'ble Shri R.K. Bali, Accountant Member in the order proposed by him in the M.A. 7. It therefore appears that the reference of paras 5 to 13 pertains to the order proposed by the learned Accountant Member in the foresaid M.A., wherein the learned Accountant Member has discussed the facts and submissions relating to aforesaid two mistakes mentioned in paras (vii) and (viii) of M.A. and has given his finding in relation to the aforesaid two mistakes. In para 19 of the order proposed by the Judicial member in the aforesaid M.A., he has expressed that he agrees with the views expressed by the learned Accountant Member in paras 5 to 13 of his order. These paras refer to the order proposed by the Accountant Member in the aforesaid M.A. The learned Judicial member has recorded his concurrence with the views expressed by the Accountant Member in relation to the findings given in paras 5 to 13 of the order proposed by the Accountant Member. The words 'I agree' expressed in para 19 of the order proposed by the learned Jud ..... X X X X Extracts X X X X X X X X Extracts X X X X
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