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TMI Blog1988 (1) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee was not entitled to a deduction of Rs. 78,770 claimed by them before the ITO towards damages caused to the grain bags. In the subsequent assessment year, it was discovered that the assessee had gone in arbitration against this claim, the quantum of which was not determined. The CIT(A), therefore, issued directions to the ITO that only the damage ascertained during the arbitration proceedings, be allowed as a claim. Finally, in the arbitration proceedings as against a claim of Rs. 8,60,642 laid by the assessee they were awarded a sum of Rs. 2,21,880 which is inclusive of the refund of the security deposit of Rs. 52,470. In this view of the matter, the ITO in his order under s. 148(3) of the Act disallowed the claim of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n he is caught within the ambit of such explanation. In fact, the Explanation is a deemed provision which projects the statutory fiction and if the assessee comes in the mischief of statutory fiction then he shall be deemed to have concealed the particulars of his income. It was well within the knowledge of the assessee that he has gone for arbitration for Award on account of the damages suffered by him and the deduction for which was made by the principles. Still he chose to claim deduction at Rs. 97,180 and as such is covered under the Explanation. I am, therefore, satisfied that the provisions of s. 271(1)(c) r/w the Explanation are applicable to him and impose a penalty of Rs. 98,000 (Rs. Ninety Eight Thousand only) being 100 per cent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to his deposit towards damaged grain yet to be fixed finally". The above order shall not apply to the amount of bills already withheld by you towards recovery of warfare and demurrage risk and cost liabilities and advance outstandings." 71. That it is clear from the above that besides 15 per cent the authorities had been making other deductions as detailed under items 3, 4, 6 in para to harass the claimants, although a substantial amount was released later on after the lapse of a considerable time which clearly proves that the amounts were wrongly and illegally withheld." 9. In addition to the aforesaid, we were also taken to page 58 of the paper book at the bottom of which the assessee has given details of the deductions made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wledge of the assessee that he had gone for arbitration and yet he claimed the aforesaid deduction. The charge of concealment will obviously depend upon the facts of a particular case. however, if a material fact is consciously kept away by the assessee from the assessing officer which has a substantial effect on the correct assessment of the assessee's income withholding of such particulars may amount to concealment. In the case in hand, no explanation is offered as to why the aforesaid particulars where not laid by the assessee before the ITO. We say so, despite the fact that the amount of Rs. 2,21,470 ultimately awarded does not specifically point out as to which part of the claim laid by the assessee was rejected and which was accepted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded to this sub-clause runs as under: "Provided that if in a case falling under cl. (c) the amount of income (as determined by the ITO an assessment) in respect of which the particulars have been concealed or inaccurate particulars have been furnished exceeds a sum of twenty five thousand rupees, the ITO shall not issue any direction for payment by way of penalty without the previous approval of the IAC." 13. In the case in hand, the penalty of Rs. 98,000 was imposed by the ITO vide order dt.19th March, 1984. As per the aforesaid provision in a case which is covered by cl. (c) of s. 271(1) of the Act, wherein the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished exceeds a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O without the previous approval of the IAC as envisaged by s. 271(1)(c)(iii) of the Act. As far as the course of action to be adopted in such a situation is concerned, in ITA Nos. 2769 to 2776/Del/85, Delhi Bench A' in an order rendered on 31st July, 1987 to which one of us is a party has held that the proper course would be to restore the proceedings to the ITO for complying with the requirements of the previous approval of the IAC. Respectfully following its view we therefore order that the file is restored to the ITO with directions that he will company with the requirements of the previous approval of the IAC and dispose of the matter according to the provisions of law. 16. The appeal is treated to be allowed for statistical purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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