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TMI Blog2015 (7) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 - Shri R.K. Panda and Shri Vikas Awasthy, JJ. For the Petitioner : None For the Respondent : Shri B.C. Malakar P. Singh ORDER PER R.K. PANDA, AM : This appeal filed by the assessee is directed against the order dated 09-02-2012 of the CIT(A)-I, Pune relating to Assessment Year 1989-90. 2. This appeal was first fixed for hearing on 01-10-2013. At the request of the Ld. Counsel for the assessee Shri Pramod Shingte the hearing of the case was adjourned to 19-12-2013. Since on 19-12- 2013 the bench did not function the case was adjourned to 05-03- 2014. On 05-03-2014, at the request of the Ld. Counsel for the assessee the hearing of the case was adjourned to 25-03-2014. On 25-03-2014 the case was adjourned to 02-07-2014. On 02-07-2014 at the request of the Ld. Counsel for the assessee the hearing of the case was adjourned to 08-10-2014. On 08-10-2014 the case was again adjourned to 02-02-2015. On 02-02-2015 the Ld. Counsel for the assessee sought adjournment on the ground that the quantum appeals are pending, accordingly the hearing of the case was adjourned to 27-04-2015. On 27-04-2015 nobody appeared on behalf of the assessee for which the hearing of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e material available on record. The relevant details in respect of the above appeal have already been given in the earlier paragraphs. The only issue which is available for adjudication is in respect of penalty levied u/s 271(1)(c) of the IT. Act at almost the minimum rate of @100% of the tax sought to be evaded in this assessment year. The brief facts are that the appellant company had filed its return of income at loss of ₹ 1,26,90,560/- on 31-10-1989 (as noted in the penalty order). The original assessment was completed on 10.3.1992 after making various additions, against which the appellant had gone in appeal. The Assessing Officer also had initiated penalty proceedings u/s 271(1)(c) of the IT. Act. The Ld. CIT(A), Nasik before whom the appeal was filed [decided the appeal on 3.11.1995 granting part relief. Department as well as the appellant went in appeal before the ITAT and both these appeals were decided on 26.7.2001 and 20.9.2001. Some of the issues in both these orders were restored to the Assessing Officer for further verification and order. The Assessing Officer completed the order u/s 143(3) r.w.s. 254 on 20.3.2003 and in aforesaid order additions of ₹ 1,90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade to explain the basis of additions, has to be treated as an afterthought, which cannot be accepted. 6.2. On careful consideration of the facts of the case and the law, it is seen that the penalty u/s.271(1)(c) was imposed in the present case in respect of additions made for unaccounted income from sale of bagasse and also for unexplained shortage of molasses stock found during assessment. On that basis the Assessing Officer has concluded that the appellant has concealed its income and therefore, to that extent furnished inaccurate particulars of income. The Assessing Officer therefore has also invoked Explanation 1 to sec. 271(1)(c) for levying the penalty. Sec. 271(1)(c) of the IT. Act provides for imposition of penalty when the assessee has concealed income or when the assessee has furnished inaccurate particulars of income. As the Courts required the Department to not only prove the concealment and/or filing of inaccurate particulars of income but even the existence of mensrea, the legislature amended the provisions to relieve the revenue from the burden of proving the mensrea in certain cases as defined in different explanations introduced in this section from time to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulars have been concealed, if the assessee did not furnish an explanation or when explanation furnished was found to be false; and also when such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him. The penalty under sec. 271(1)(c) is a penalty for concealment of income or for furnishing of inaccurate particulars, or, under the extended definition by the virtue of Expln. 1 to sec. 271(1)(c), for a deemed concealment of income. As a corollary to this legal position, unless it is established that there is concealment of income or furnishing of inaccurate particulars or it is established that, on the facts of the case, concealment of income can be deemed in accordance with the provisions of the Explanation, penalty cannot be imposed under section 271 (1)(c). 6.2. The facts of the present case are now tested vis-a-vis the above legal position to examine whether the present case is covered under the main part of the provisions or under the deeming provisions of Explanation 1 of section 271(1)(c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correctly levied. Ground No. 1 is dismissed. 6.4. The appellant in their submissions has also claimed that the penalty is not leviable as per the ratio of the decision given by the Hon'ble Supreme Court in the case of Virtual Soft System Ltd. (2007) 289 ITR 83 (SC). The claim of the appellant is that the appellant had no positive income or taxable income in this year and in the absence of the same penalty cannot be levied. This aspect of the claim of the appellant was also considered. It is noted that the Courts have taken divergent views on this issue. Different Courts including the P H High Court in the case of CIT.Vs. Prithpal Singh Co. (1990) 183 ITR 69 (P H) has held that the penalty cannot be levied in the case where the return income is at loss. However, divergent views were taken by other Courts including Kerala High Court in the case of CIT Vs. India Seafoods (1976) 105 ITR 708 (Ker). In this case the Kerala High Court while dealing with a case where the final income was a loss, upheld the levy of penalty with reference to the law as it stood in 1968, even when there was no Explanation 4. It was held that the Explanation is clarificatory in nature. This view wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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