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TMI Blog2006 (6) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... re indulging in business which was not accounted for in the books of account. At the time of search and seizure operation aggregate sum of Rs. 13 lakhs was offered for taxation by both the firms. However, return of income was filed by M/s Shankar Dass Balram Kumar on 31-8-1992 declaring income of Rs. 2,22,020. The Assessing Officer completed the assessment under section 144 at an income of Rs. 31,63,438. On appeal, the CIT(A) reduced the income to Rs. 25,37,120. On further appeal to the Tribunal by the assessee as well as by the department, the income of the assessee was reduced to Rs. 18,66,158. However, in respect of the addition of Rs. 2,18,992, the issue was restored to the file of the Assessing Officer for fresh adjudication. The Assessing Officer imposed a penalty of Rs. 8,62,524 under section 271(1)( c ) after obtaining prior approval of JCIT. 3. The another appellant, M/s Onkar Chand Co. also filed its return of income on 30-10-1992 declaring income of Rs. 1,29,390. The Assessing Officer completed the assessment under section 143(3) at Rs. 23,68,060. On appeal to the CIT(A), no relief was allowed to the assessee. Assessee as well as the department had further appealed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income between the sister concerns in the ratio 47:53. The assessee had also made a disclosure of Rs. 22.50 lakhs to be distributed in both the cases. So, however, the Assessing Officer has imposed the penalty without considering the explanation of the assessee. It was further contended that the Assessing Officer was wrong to impose the penalty before the finalisation of the assessment. It was pointed out that the Tribunal had set aside a particular issue to the file of the Assessing Officer for fresh decision. The Assessing Officer did not pass an order on the directions of the Tribunal before imposition of penalty. According to the ld. Counsel, the penalty orders are premature and, therefore, liable to be cancelled. It was further contended that the Assessing Officer had been requested to keep the penalty proceedings in abeyance till finalization of the quantum by the appellate authorities. It was further contended that the Assessing Officer had not recorded satisfaction for furnishing of inaccurate particu- lars of income. Since the recording of satisfaction is foundation for imposition of penalty, the penalty orders in both the cases, according to the ld. Counsel, are invalid. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has referred to the communications made with the assessee, copies of which have been placed on record to support the finding of the CIT(A). Responding to the contention advanced on behalf of the assessee that the benefit of Explanation 5 to section 271(1)( c ) was not allowed to the assessee, the ld. D.R. pointed out that the assessee had not paid any taxes with reference to the amount disclosed. The said amount was also not disclosed in the return of income. The AO had made the addition purely on the basis of the incriminating documents found in the course of search. It was accordingly pleaded that the benefit of Explanation 5 to section 271(1)( c ) is not available to the assessee. Reliance was also placed on the following decisions to support the contention that assessment order has to be read in totality to find out as to whether satisfaction has been recorded for initiation of penalty proceedings: ( i ) Om Parkash Gupta v. ITO [2002] 81 ITD 55 (Chd.); ( ii ) CIT v. Official Receiver of the High Court [1993] 203 ITR 233 (Cal.) ( iii ) K.P. Madhusudhanan v. CIT [2001] 251 ITR 99 (SC); ( iv ) CIT v. A. Sreenivasa Pai [2000] 242 ITR 29 (Ker.). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd and are satisfied that the requisite satisfaction has been recorded by the Assessing Officer in the course of assessment proceedings. Therefore, there is no infirmity in regard to assumption of jurisdiction by the Assessing Officer for imposition of penalty under section 271(1)( c ). Penalty orders passed by the Assessing Officer are premature: It was argued before us that the Assessing Officer had passed penalty orders before the finalisation of the assessment orders. This contention advanced on behalf of the assessee is not well-founded. Assessments had been completed in this case and the matter had travelled up to the level of the Tribunal. The Tribunal has confirmed some of the additions and restored only one addition in each case to the file of the Assessing Officer for reconsideration. The Assessing Officer has not imposed any penalty with reference to the issues remitted back by the Tribunal for fresh consideration. The penalty has been imposed with reference to only such amounts of addition as were confirmed by the Tribunal. The Tribunal in the quantum appeal had not set aside the whole assessment but only part of the additions with reference to which no penalty ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commission. It has further been recorded by the Tribunal that for the assessment year 1992-93 i.e., the year under appeal before us, the assessee had filed the returns on the basis of the profit and loss a/c and balance-sheet which did not incorporate sundry debtors recorded in the Uchanti books. The Assessing Officer wanted to complete assessment for assessment year 1992-93. So, however, the assessee persisted with the request for adjournments on the ground that application under section 245C(1) was pending before the Settlement Commission. Ultimately, the Assessing Officer declined the prayer for adjournment on the ground that the assessee s application under section 245C(1) was not admitted by the Settlement Commission and since the assessment for assessment year 1992-93 was getting time-barred, ex parte assessment was made in both the cases under section 144. Assessee got partial relief from the CIT(A). In the meantime, settlement petitions filed by both the assessees were rejected vide order dated 23-2-1995. The Settlement Commission had opined that since the matter was pending in the Tribunal and there are no more complexities involved, the application did not deserve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The Tribunal in paras 8, 8.1 and 8.2 of its order has recorded the following finding: "(8) Taking up the issue relating to sundry debtors found in the Uchanti Ugrahi/debtors Bahi, the Assessing Officer prepared unaccounted balance in the accounts of different debtors and total of such unaccounted debtors as per the Assessing Officer, came to Rs. 20,79,211. Lists of these debtors were prepared by the Deptt. and shown to establish and inspection also given. At the time of assessment, to establish agreed that there is no dispute with regard to details of unaccounted sundry debtors. The assessees, however, claimed that if there were unaccounted debts recoverable there should also be unaccounted creditors to whom payments were to be made. However, to establish did not have any details of such creditors to whom amounts were payable and also did not have any details of credit purchases which were not reflected in regular books of account. Assessing Officer accordingly held that no benefit on account of alleged unpaid creditors for which no details were available could be given. He accordingly made an addition of Rs. 20,79,211 on account of unaccounted sundry debtors found during sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll as ld. CIT(A). It is too late in the day now to contended that the actual totalling of these debtors was Rs. 19,87,013 and not Rs. 20,79,211. Since these debtors relate to the business done by the assessee outside the books of account, we are of the opinion that the departmental authorities were justified in making the addition and ld. CIT(A) was also correct in confirming the same. We will uphold the orders of the departmental authorities in this regard and we also approve the bifurcation of the sundry debtors @ 47 per cent and 53 per cent as done by the Assessing Officer on the basis of turnover of the two concerns, namely, SDBK and OCC. Accordingly, this issue is adjudicated against the assessees and in favour of the Revenue." The above finding of fact has not been rebutted by any evidence before us. It is true that the finding recorded in the assessment proceedings is not conclusive for the purpose of imposition of penalty. So, however, it is for the assessee to establish that the finding recorded in the assessment proceedings requires reconsideration on the basis of evidence available on record or any other evidence that may be produced before the authorities. In the abse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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