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TMI Blog2012 (4) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... n asserting is required to make good his version. But in a situation where it is not contested, but admitted, production of proof is not necessary nor warranted in law. - both the appellate commissioner and the tribunal erred In setting aside the order of the assessing officer levying penalty - Decided against the assessee. - IT Appeal No. 522 of 2006 - - - Dated:- 2-4-2012 - D.V. SHYLENDRA KUMAR AND K. GOVINDARAJULU, JJ. JUDGMENT D.V. Shylendra Kumar, J. Appeal by the revenue under Section 260a of the Income Tax Act, 1960 [for short, the Act] directed against the affirmation order dated 29-9-2005, passed by the Income Tax Appellate Tribunal, Bangalore Bench 'B' in ITA No 256/Bang/2002, dismissing the appeal of the revenue before the tribunal. 2. The assessee is a partnership firm and the assessment year is 1996-97. The assessee had filed its return disclosing an income of Rs. 4,68,340/-. This income had been disclosed in the original return and the assessment was completed under Section 143(3) of the Act. 3 . The assessing officer reopened the assessment, particularly as it was found that there was a cash credit entry for a sum of Rs. 4,50,000/-, as discl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating that the assessee had persisted the cash credit for the subsequent assessment year also, but it was by sheer chance that this was found to be not a true cash credit in the course of the assessment proceedings of the said Thimme Gowda, particularly after the statement of said person to the authority that he had never lent such an amount to the assessee, if became necessary for the authorities to reopen the concluded assessment of the assessee and the assessee having offered to pay tax on the cash credit as income for the period, only after receipt of the notice under Section 148 of the Act, thought it proper to levy penalty being a situation of furnishing inaccurate particulars of income, coming within Section 279(1)(c) of the Act. 8. The assessing officer also felt that in the circumstance under which the assessee came forward to offer the amount as income Is only in a situation when the concluded assessment was reopened and notice was issued to the assessee and therefore it can be presumed to be a situation of not a voluntary disclosure by the assessee, but because that in the circumstance the assessee was left with no choice but to offer the amount as income and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sri Ashok A Kulkarni, learned counsel for the respondent assessee at some length. 13. Sri Kulkarni has raised a preliminary objection regarding maintainability of the appeal by pointing out that in terms of the Board's circular which has come to be revised from time to time and instruction No 2 of 2005 dated 24-10-2005 governs the present appeal; that for an appeal before a high court filed under Section 260A of the Act, unless the subject matter is above Rs. 4,00,000/- monetary value, the department should not go in appeal and therefore the present appeal in respect the subject matter of Rs. 1,80,000/- is not maintainable. 14. Sri Kulkarni has also placed reliance on the decision of a Division Bench of this court rendered on 20-9-2011 in 1TA No 907 of 2006, referring to this circular and holding that the appeal was not tenable, as the subject matter of the appeal was less than the monetary limit as per the circular. 15. Sri. E R Indrakumar, learned senior counsel appearing for the appellant-revenue, on the other hand, by drawing out attention to pained of the very circular, reading as under: 3. The Board has also decided that in cases involving substantial question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. 19. In so far as the merits of the matter is concerned, submission of Sri E R Indrakumar, learned senior counsel appearing for the appellant-revenue is that levy of penalty under 271(1)(c) of the Act has been subject matter of a good number of decisions; that there has been a good number of legislative changes made to the section and the legislative changes have the effect of sustaining a levy of penalty even when there is no element of mens rea involved; that the explanation-1 added to Section 271(1)(c) of the Act. particularly explanation-IB, reading as under: Explanation 1 - Where in respect of any facts material to the computation of the total income of any person under this Act, ** ** ** (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed, in computing the total income of such person as a result thereof shall for the purposes of clause (c) of this sub-section, be deemed to represent the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the addition of that Explanation, the view taken in this case can no longer he said, to be applicable. The appeal is, therefore, dismissed with costs. 21. Sri Indrakumar has also placed reliance on the decision of the Supreme Court in the case of Commissioner of Income-tax v . Onkar Saran and Sons [1992] 135 ITR 1(SC) to submit that while the law to be made applicable for the levy of penalty is only with reference original return filed and submitted that mere fact that the assessee filed a return in response to the notice issued under Section 148 of the Act and on this occasion chose to disclose the true particulars of the income and assuming that the assessment has been concluded based on such return without any additions or deletions, that will not in any wav absolve the assessee from the attraction of Section 271(1)(c) of the Act and therefore has submitted that the appellate commissioner and the tribunal have committed an error in law in opining that no penalty was leviable, as the assessee has bona fide filed return and had not suppressed any income in the return pursuant to notice under Section 148. 22. Reliance is also placed on a Division Bench decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Commissioner of Income-tax v. Ram Commercial Enterprises [2000] 246 ITR 568] and a judgment of Madhya Pradesh High Court in the case of Commissioner of Income-tax v . Suresh Chandra Mittal [2000] 241 ITR 124 and this judgment having been upheld by the Supreme Court in the case of Commissioner of Income-tax v . Suresh Chandra Mittal [2001] 251 ITR 9 to submit that penalty is not justified in a situation where the assessee offers an explanation and unless that explanation is proved to he false by the revenue and submits that in the present ease, there being no specific recording of finding as to how the explanation offered by the assessee is false and on the other hand, the assessee having indicated that though there was no concealment on its part more so when the assessee offered the income to buy peace than to keep litigating over the matter and that being a bona fide explanation, there was no justification for the levy of penalty. 26 . Sri Kulkarni has also drawn our attention to the fiction created under Section 271 (1B) of the Act to submit that as there was no addition of income to the return filed nor any deletion of particulars of deductions cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32. The decisions referred and relied upon by Sri Kulkarni. learned counsel for the respondent-assessee do not advance the case of the assessee in the present case, as the mere fact that the assessee conies up with an explanation, that the income he has offered is only to buy peace and not a suppression nor concealment, but on the other hand a clear case of admission of not furnishing true or correct income earlier. 33. We are also of the view that the principles relating to offering the person whose statement the revenue or the assessing officer had recorded for cross examination will arise only where the matter is contested etc. With the assessee itself having admitted that, cash credit entry is an income, going back from that saying that it was only to buy peace is not, in our considered opinion, an acceptable explanation to say that it is not an income. I here is distinction between an amount being brought to tax as income and an assessee offering that as an income to buy peace etc. It may be an explanation for the earlier default, but it cannot detract from the fact that amount has been assessed as income and but for the reopening of the assessment proceedings, the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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