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TMI Blog2008 (9) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... g to Ratlam for purchase of silver for them. After necessary inquiries made by the Incometax Officers at Indore, it was found that the money did not belong to M/s. Mukesh Kumar Samrathmal but belongs to the assessee himself. The assessee was doing business of sarafa, cloth, etc., in the capacity of karta of the Hindu undivided family named M/s. Sardarmal Panchamsingh, Agar. Therefore, in the order under section 132(5) it was held by the Income-tax Officer, Additional D-Ward, Ujjain, that the amount seized from the assessee belongs to M/s. Sardarmal Panchamsingh, Hindu undivided family, and the same was taxed later on in the hands of the Hindu undivided family. During the assessment proceedings the income of Mukeshkumar Samrathmal was clubbed with the above seized amount holding that this amount belongs to Hindu undivided family and Mukeshkumar Samrathmal was a benami concern. The matter was taken up in appeal before the learned Commissioner of Income-tax (Appeals). The proceedings were set aside. During the setting aside of proceedings it was held by the Assessing Officer that a sum of Rs. 2,67,627 belongs to M/s. Sardarmal Panchamsingh, Hindu undivided family and again added to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 7,000 from the person and Rs. 28,500, which was declared by the assessee) was assessed in the hands of the assessee in his individual capacity, the assessee has contested the addition in appeal and the same addition was confirmed by the learned Commissioner of Income-tax (Appeals) as well as the Tribunal. The Assessing Officer keeping in view all the above facts, initiated the penalty proceedings under section 271(1)(c) of the Act and noted from the above facts that the assessee has changed his statement one after another knowingly to evade the tax liability and held that the assessee has deliberately concealed the particulars of his income. It was submitted by the assessee before the Assessing Officer at the penalty stage that the income was originally assessed on protective basis and later on it became substantive as per the order of the Tribunal and that the assessee has filed the appeal before the hon'ble High Court of Madhya Pradesh. The Assessing Officer however did not accept the contention of the assessee and imposed the penalty under section 271(1)(c) of the Act vide separate order. The penalty order was challenged before the learned Commissioner of Income-tax (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal because it was neither challenged by the assessee or the Revenue before the Tribunal. He submitted that parallel proceedings were also conducted in the case of Sardarmal Panchamsingh, Hindu undivided family for the assessment year 1982-83 and the Assessing Officer vide the assessment order dated March 28, 1985 made the substantive assessment of the same cash seized by the Central excise authorities in the hands of the Hindu undivided family. The above assessment order in the case of the Hindu undivided family was challenged before the learned Commissioner of Income-tax (Appeals) who vide order dated August 19, 1987 confirmed the finding of the Assessing Officer and held that the cash seized by the Central excise authorities is the income from undisclosed source of Hindu undivided family. Learned counsel for the assessee submitted that the Hindu undivided family M/s. Sardarmal Panchamsingh, as well as the Revenue preferred an appeal before the Tribunal against the order of the learned Commissioner of Income-tax (Appeals) dated August 19, 1987 and the Tribunal held in the case of the Hindu undivided family that no addition could be made in the hands of the Hindu undivided family ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mily there fore, the explanation of the assessee cannot be said to be false or is not supported by any material on record. He submitted that the assessee offered explanation at the initial stage which is substantiated but the authorities below did not accept the contention that the cash belonged to the individual. Therefore, no penalty is leviable in the matter. Learned counsel for the assessee relied upon the order of the Income-tax Appellate Tribunal, Ahmedabad Special Bench in the case of Gujarat Credit Corporation Ltd. v. Asst. CIT [2008] 302 ITR (AT) 250 in which the Assessing Officer considered the facts that the assessee had sold securities held as investments during the relevant year but had debited the loss suffered on account of the sale to the profit and loss account as business loss, that the assessee having held the securities as investments and shown them as assets in the balance-sheet, the transfer of such assets attracted the provisions of section 45 of the Act and that therefore, any loss on account of transfer of such assets was required to be treated as capital loss under the head "Capital gains" which required to be added back to the total income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Therefore, the notice under section 148 was correctly issued to the assessee. The learned Departmental representative therefore, submitted that the penalty was correctly imposed and the appeal of the assessee may be dismissed. We have considered the rival submissions and the material available on record. It is not in dispute that the addition of cash of Rs. 2,67,627 is made in the assessment order dated March 24, 1995 in the proceedings under section 143(3)/148 of the Act. The quantum addition is confirmed by the Commissioner of Income-tax (Appeals) as well as by the Tribunal and the appeal of the assessee has been dismissed by the hon'ble High Court of Madhya Pradesh and the special leave petition of the assessee is also dismissed. However, equally it is a settled law that the penalty and quantum proceedings are entirely different proceedings. The findings given in the assessment proceedings are relevant and have probative value but such proceedings are not material alone and may not justify imposition of penalty. The assessee could have challenged the findings given in the assessment proceedings in the penalty proceedings. The onus is upon the assessee to rebut the presumpti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and investment allowance on newly installed machinery was based on the High Court decision that user of machinery in test production is also user for the purpose of the assessee's business. Claim withdrawn subsequently. Penalty levied on the ground of deliberate furnishing of inaccurate particulars in original return. There was no finding that the claim was mala fide and that two opinions on question could exist. Subsequent withdrawal was held to be not amounting to deliberate furnishing of inaccurate particulars in original return. The Tribunal cancelled the penalty and the hon'ble High Court of Madras confirmed the order of the Tribunal by dismissing the appeal of the Revenue. The hon'ble Supreme Court in the case of K. C. Builders v. Asst. CIT [2004] 265 ITR 562 held (headnote) : "'Concealment' inherently carries with it the element of mens rea. The fact that some figure or some particulars have been disclosed, even if it takes out the case from non-disclosure, would not by itself take the case out of the purview of furnishing inaccurate particulars. Mere omission from the return of an item of receipt amounts neither to concealment nor to deliberate furnishing of inaccurate pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see filed returns of income in his individual capacity for several assessment years including the assessment year under appeal from 1975-76 to 1984-85 declaring income in all the assessment years through which he explained the possession of cash of Rs.2,67,627 prior to the section 148 proceedings. However, the return of income while considering for the purpose of assessment under section 143(3) for the assessment year 1975-76, the income so declared was accepted. However for the assessment year 1982-83 under appeal, the Assessing Officer treated the cash seized for the purpose of making protective assessment in the hands of the assessee in his individual assessment vide order dated January 2, 1985. The aforesaid assessment order dated January 2, 1985 was challenged before the learned Commissioner of Income-tax (Appeals) and the learned Commissioner of Income-tax (Appeals) vide order dated August 21, 1987 deleted the addition of Rs.2,67,627 on protective basis in the hands of the assessee in his individual capacity because he has held that the aforesaid cash seized by the Central excise authorities belonged to the Hindu undivided family. As per the assessee, the order of the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantum addition has become final, as noted above, there is no need to discuss the merits of the addition confirmed by the Tribunal as well as by the hon'ble High Court of Madhya Pradesh as well as by the hon'ble Supreme Court. The Tribunal is bound to follow the orders on quantum. However, the facts noted above clearly show that there exist two opinions on the subject-matter of addition because the Revenue authorities at one stage claimed that the amount in question belonged to the Hindu undivided family but later on after the order of the Tribunal changed the stand by taking that the amount in question belonged to the individual though the fact remains that the order of the learned Commissioner of Income-tax (Appeals) in the case of individual was allowed to become final holding that the cash belonged to the Hindu undivided family. The Assessing Officer also chose to ignore the order of the learned Commissioner of Income-tax (Appeals) dated August 21, 1987 through which the addition was deleted on protective basis in the case of the assessee individual. The facts and circumstances noted above clearly proved that the assessee has not acted deliberately in defiance of law and has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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