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TMI Blog2013 (2) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... Moreover, the assessee had not acted in a contumacious manner. In fact, the assessee had made a clean breast of the entire facts and had admitted the purchase of the property from the income which was not disclosed. The non-disclosure of the income was due to the facts that the assessee was an uneducated and illiterate petty contractor who received payments only after deduction of tax at source. It is under these circumstances that the assessee believed bona fide that no further tax was required to be paid. In T. Ashok Pai v. CIT [2007 (5) TMI 199 - SUPREME COURT] the Supreme Court observed that if the explanation given by an assessee is taken to be bonafide, the question of imposition of penalty under section 271(1)(c) of the Act wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is a petty contractor supplying electrical panels for M/s. Voltas and M/s. Blue Star, he is also uneducated and illiterate. The assessee was under the impression that since tax was deducted at source before payments were made, no further tax was required to be paid. The assessee admitted the investment of Rs. 11 lakhs in the properties. 5. Thereafter, the assessee filed returns for the assessment years 1985-86 to 1989-90. These returns were accepted as they were, without any further payment of tax and regularized after issuance of a notice under section 148 of the Act. 6. The assessee paid the tax due and with regard to interest thereon, an application was made for waiver. Ultimately, as recorded by the Tribunal, the application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by uti-lizing (wholly or in part) his income,- (a) for any previous year which has ended before the date of the search, but the return of income for such year has not been furnished before the said date or, where such return has been furnished before the said date, such income has not been declared therein ; or (b) for any previous year which is to end on or after the date of the search,then notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently, the asses-see filed a return of income before the expiry of time specified under section 139 of the Act and he also paid the tax thereon. As regards the interest, that was subsequently waived by the Revenue. The Tribunal, therefore, came to the conclusion that the ingredients of clause (2) of Explanation 5 to section 271(1)(c) of the Act had been fully met by the assessee. 12. Secondly, the Tribunal also took into consideration the fact that the assessee was a petty contractor and was illiterate and uneducated. That, the assessment has been regularized by the Revenue by issuance of a notice under section 148 of the Act and the return filed by the assessee was accepted, as it is, on payment of the necessary tax. The Tribunal also t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of imposition of penalty under section 271(1)(c) of the Act would not arise. Although the findings arrived at in assessment pro-ceedings would constitute good material for penalty proceedings, yet in penalty proceedings, the matter has to be looked at differently since the consequences for the assessee would be different, and penal. Therefore, the rule of strict construction would apply. 16. In the present case, both the Commissioner of Income-tax (Appeals) and the Tribunal were satisfied about the bona fides of the assessee. That being the position, coupled with the fact that the assessee had complied with the provisions of clause (2) of Explanation 5 to section 271(1)(c) of the Act, no case for imposition of penalty was made out. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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