TMI Blog2002 (6) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... tes to the confirmation of penalty levied under section 271(1)(c). The penalties levied for concealment of income arc as under: Assessment year Nature ol Penalty Quantum of Penalty 1993-94 U/s. 271(i)(c) Rs. 45,114 1994-95 -do- Rs. 49,620 1995-96 -do- Rs. 1,42,288 1996-97 -do- Rs. 49,620 The assessee has paid Rs. 500 each respectively for each assessment year as "Filing Fees" at the time of filing appeals before the Tribunal. The Registry has doubted that the appropriate filing fee payable under section 253(6) of I.T. Act has not been deposited. The Registry has worked out shortfal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that there is no direct nexus between the penalty imposed and the assessed income and the imposition of penalty is on the basis of the tax and not on the basis of the quantum of income assessed. In support of his contention, ld. A.R. has drawn our attention to the memorandum explaining provisions of Finance Bill, 1999, para (vii). He has further argued that the penalty proceedings are independent and separate proceedings from the assessment proceedings having no connection with the assessed income and this view has been expressed by Hon'ble Bombay High Court in the case of CIT v. Dharamchand L. Shah [1993] 204 ITR 462. 4. We have carefully examined the issue before us in the light of the provisions of the Act as well as the Circulars i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the filing fee is directly linked and depends upon the total income of the assessee as computed by the Assessing Officer. However, clause (d) does not refer to the total income assessed and specifics that where the subject-matter of appeal relates to any other matter than specified in the aforesaid three clauses, the filing fee should be Rs. 500. In this regard the memorandum explaining provisions in Finance Bill, 1999 para (vii) states as reproduced below:-- "(vi)(ii) Finance (No. 2) Act, 1998, introduced a scale of fees for filing appeals before the Commissioner (Appeals) and also enhanced the existing scale of fee payable before the Appellate Tribunal under various direct tax Acts. The fee payable under Income-tax Act both before the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed income. Thus the intention of the Legislature is amply clear that the appeals not connected with income assessed can be filed before the Tribunal by depositing Rs. 500 as filing fee. It is worth mentioning that the memorandum explaining provisions of the clause as well as the Circular issued by CBDT have used the word 'etc.' after citing some examples of appeals relatable to issue such as TDS defaults or non-filing of returns. This indicates that the clarification and explanation is not exhaustive but inclusive. According to us, the sub-clause includes appeals related to the penalty as well. The subject-matter of the present appeals is not the total income assessed by the Assessing Officer but the levy of penalty. When we look into th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for all the 4 assessment year under appeal. Hence the appeals are valid and to be adjudicated upon. 7. Since all these appeals have been held as valid appeals, we proceed to decide the same on merits. As per penalty orders the returns were filed declaring 'Nil' income in compliance of notice under section 148 of I.T. Act. The assessee firm came into existence w.e.f. 24-4-1991 and engaged in the business of construction. As per Assessing Officer the assessee has shown substantial work-in-progress in the P L Account but no income was declared. Considering the business activity of the assessee the Assessing Officer estimated profit on work-in-progress and assessed accordingly. Due to this reason he has held that the assessee deliberately c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od which has also been accepted through various judicial pronouncement. In this regard, during the course of hearing ld. A.R. has cited following decisions where the "Project Completion Method' for construction business was approved. (1) CIT v. VS. Dempo Co.(P.) Ltd. [1996] 131 CTR (Bom.) 203, (2) Shapoorji Pallonji Co. (Rajkot) (P.) Ltd. v. ITO [1994] 49 ITD 479 (3) Shree Nirmal Commercial Ltd. v. CIT [1992] 193 ITR 694 (Bom.) 10. In the instant case the assessee had reason to declare 'Nil' income for which a legitimate explanation was offered. Mereby non-believing an explanation may not lead to levy of penalty automatically unless the explanation is not found to be bona fide. It has been brought to our notice that on identical ..... X X X X Extracts X X X X X X X X Extracts X X X X
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