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TMI Blog1994 (10) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... initiated under section 271(1)(c) and section 273 of the Income-tax Act, 1961. And the impugned penalties were levied by the Assessing Officer, going on the basis of the additional income disclosed by the assessees in the revised returns and in pursuance of the aforesaid settlement. 4. Thereupon, the assessees moved the Commissioner (Appeals) contending that these were essentially cases of voluntary surrender of additional income and that therefore were not fit cases for levying penalties under section 271(1)(c)/273 of the Act. The said contention did not find favour with the Commissioner (Appeals), who declined to interfere in the matter and dismissed the appeals filed by the assessees. It is in these circumstances that the asseassees are now before us. 5. Early in the course of hearing before us, Shri Devanathan, the learned counsel for the assessee, contended that the assessees having voluntarily agreed to have certain additional amounts brought to charge in their hands and, what was more significant, the department not having collected any evidence to show that the assessees had concealed the particulars of their income, penalties under the said sections could not have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the quantum of the reduction of the penalties allowed by the Commissioner by the order(s) passed by him under section 273A of the Act. 9. In response, the learned counsel for the assessee conceded not only that the assessees of this group had approached the Commissioner under section 273A of the Act but also that the Commissioner had substantially reduced the penalties levied earlier by the Assessing Officer. He also filed the abstract called for by the Bench. Responding to the query at item (b) above, Shri Devanathan vehemently contended that, merely because the Commissioner had passed orders under section 273A of the Act, the appeals that are now before us would neither abate nor become infructuous, According to him, under the scheme of the Act, the assessee has two avenues open to him, namely, (a) appellate avenue and (b) section 273A avenue. And there is nothing in the Act to suggest that the assessees are not free to pursue both the avenues simultaneously. For a fact, to a specific query in this regard from the Bench Shri Devanathan strongly averred that, even after the Commissioner had passed an order under section 273A of the Act, it was open to the assessee in the pend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o follow the principles of natural justice --- see the Supreme Court case of R.B. Shreeram Durga Prasad and Fatechand Nursing Das v. Settlement Commission [1989] 176 ITR 169. 14. Dealing then with the merits of the case Shri Devanathan made the following points. The Madras case of Krishna Co., was not applicable to the cases before us, because there the Assessing Officer had found certain discrepancies to start with. It was only thereafter that the assessee surrendered the sums in question. It was in those circumstances that the Madras High Court rightly came to the conclusion that levy of penalty under section 271(1)(c) of the Act was justified in that case. In the cases before us, however, the facts are totally different. The Assessing Officer did not collect any evidence to show that the assessees of this group had concealed particulars of their income or had furnished inaccurate particulars of their income. True, there was a search in these cases, but the assessees agreed to the settlement in question " with a view to avoid protracted litigation and to avoid the unpleasantness to a number of creditors ". Thus, we have before us a case of voluntary surrender of income and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner under section 273A of the Act ; nor are we the proper forum before which the issue could be raised. Accordingly we reject the said arguments. 18. As for the contention of Shri Devanathan that even after the passing by the Commissioner of the order under section 273A of the Act, the appeals that are pending before us would not abate, here again we disagree. 19. As for the Madras case of M.K.S. Vanavarayar, as we see it, that was not a case of parallel proceedings. There the High Court held that the order passed by the Commissioner under section 18(2A) of the Wealth-tax Act was non est in law. The court therefore held that it was open to the assessee therein to pursue the normal appellate proceedings in relation to the penalty orders passed by the Assessing Officer. This case thus is distinguishable on facts. 20. As rightly contended by the learned departmental representative, the ratio of the Calcutta case of Smt. Ichhabai Panchal, provides the key to resolve the issue before us. In that case, in response to a show-cause notice issued in that regard, the assessee contended before the Assessing Officer that, there being no concealment of income on his part, the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kempanna [1980] 126 ITR 825. In that regard the Calcutta High Court observed : " Reliance, however, was placed on the observations of the Karnataka High Court in the case of CWT v. Kempanna [1980] 126 ITR 825, where it was held, inter alia, that the power conferred on the Commissioner under section 18(2A) of the Wealth-tax Act, 1957, was only to reduce or waive the amount of minimum penalty imposable on a person under clause (i) or clause (iii) of sub-section (1) of section 18. The power could be exercised by the Commissioner notwithstanding the default and there being no reasonable cause for the failure to furnish the return within the time prescribed. The question, the court observed, of the existence of a reasonable cause was not within the ambit of section 18(2A) ; that inheres in the WTO. The opening words of the section also indicated that it was only notwithstanding anything contained in clause (i) or clause (iii) of sub-section (1) of section 18 and notwithstanding any other provision in the Act that the Commissioner could act. The provision did not override or obliterate the jurisdiction conferred on the other authorities under the Act. The court further observed that, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Madhya Pradesh case. 24. As for the cases listed at item Nos. 1, 2, 4, 5 and 6, all these cases are distinguishable because there the question that arose for consideration was whether an appeal to the first appellate authority against a penalty order would not be competent by reason only of the fact that the application filed by the assessee under section 18(2A) of the Wealth-tax Act/273A of the Income-tax Act was rejected by the Commissioner. These cases, therefore, cannot avail the assessee. 25. The Rajasthan case of Kashi Ram Lila cannot also avail the assessee. There the court was not concerned with the merits of the case. There the court was concerned with the question of maintainability of an appeal against a penalty order passed by the Assessing Officer pursuant to an order under section 18(2A) passed by the Commissioner. In that regard the High Court held that a question of law arose in that case and that question had to be referred to the High Court for their esteemed opinion. 26. The Bombay case at No. 8 of paragraph 11 supra too cannot avail the assessee because it turned on different set of facts. There the Assessing Officer had levied penalties under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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