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TMI Blog2010 (7) TMI 990X X X X Extracts X X X X X X X X Extracts X X X X ..... sing the income at ₹ 71,07,958/-. Addition of ₹ 70,16,075/- was made on account of difference in cost of construction shown by the assessee and that determined by the DVO. The books of account were held to be defective and rejected by applying provisions of section 145(2) of the IT Act. Penalty proceedings were also initiated u/s 271 (1) ( c ) of the IT Act. In assessment year 1998-99 return of income was filed at ₹ 79,516/-. Assessment u/s 143(3)/147 was finalized on 31-07-2002 assessing income at ₹ 60,68,261/-. Addition of ₹ 59,81,940/- was made on account of same difference in cost of construction shown by the assessee and that determined by the DVO. Similarly, in assessment year 1999- 2000 return of income was filed at ₹ 45,742/-. Assessment u/s 143(3) read with section 147 of the IT Act was finalized on 31-07-2002 assessing income at ₹ 13,17,862/-. Addition of ₹ 12,66,640/- was similarly made on account of difference in the cost of construction shown by the assessee and determined by the DVO. In these years also books of account were rejected and penalties were initiated. 3.1 Appeals against the above assessment orders were pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The learned Counsel for the assessee reiterated the submissions made before the authorities below and referred to appeal effect orders passed by the AO giving appeal effect to the order of the ITAT on quantum and submitted that the total income assessed in assessment year 1997-98 is not the same amount which is shown in the return of income and that in subsequent two years, the income assessed by the AO and returned income is below taxable limit. Therefore, on estimate basis penalty is not justified. He has submitted that there is no record to prove that the assessee has filed inaccurate particulars of income or concealed particulars of income. He has submitted that entire facts are available on record; therefore, penalty is not justified. He further submitted that the AO while initiating penalty proceeding in the assessment years noted that penalty proceedings have been initiated for furnishing inaccurate particulars of income or concealment of particulars of income, but while passing penalty orders, the AO has noted in the impugned orders that these are fit cases for levy of penalty u/s 271 (1) ( c ) of the IT Act read with Explanation 1 for furnishing inaccurate particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 59,75,377 Addition sustained by the ITAT (15% of 5203494) = ₹ 7,80,524 Reduction granted by ITAT ₹ 51,94,853 ₹ 8,72,407 Less: Expenditure deductible as per order of ITAT ₹ 7,80,524 Revised total income ₹ 91,993 In assessment year 1997-98, the assessee filed return of income at ₹ 1,06,844/- and the AO while completing assessment taken the figure as per order dated 30-03-2000 at ₹ 91,883/- apart from addition made on account of difference of cost of construction. After giving appeal effect by the AO as noted above, the revised total income is now computed at ₹ 91,993/-. Therefore, there is no effect of tax liability upon the assessee. There is no concealment of income or filing of inaccurate particulars of income because the AO has virtually accepted returned income. The tax sought to be evaded would, therefore, be worked out to Nil. B) Assessment Year 1998-99 The AO passed the following order giving appeal effect to the ITAT Order: Order giving effect to ITAT s order In view of the order of the Hon ble ITAT Ahmedabad Bench-B, Ahmedabad vide ITA No-2851 to 2853/Ahd/2003 with ITA No-2916 to 2918/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stimation of cost of construction. The Hon ble Madras High Court in the case of CIT Vs K. R. Chinni Krishna Chetty reported in 246 ITR 121 held as under: Under section 271(1)(c) of the Act the authority is given the discretion to levy a penalty if there is concealment of particulars of income and even as regards the quantum of the penalty there is a discretion. That discretion was available to the Tribunal as well when it considered the matter in appeal. Of greater importance is the necessity for a definite finding that there is concealment, as without such a finding of concealment, there can be no question of imposing any penalty. The mere revision of the income to a higher figure by the assessing authority does not automatically war- rant an inference of concealment of the expenditure on the construction. The addition to the income of the assessee based on the report of the valuer was rightly regarded by the Tribunal as being insufficient for recording a finding of concealment of income. Concealment implies some deliberate act on the part of the assessee in withholding the true facts from the authorities. The fact that the valuer assessed the building at a figure higher than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The report of the DVO based upon his opinion is against the opinion of the assessee. Therefore, on difference of opinion, no case of concealment of income or filing of inaccurate particulars of income could be made out. The fact that the DVO assessed the cost of construction at a higher figure than that recorded by the assessee would not lead to inference of concealment. The assessee disclosed all particulars at the assessment stage. There is no material available on record to show that the assessee has concealed true facts from the authorities below. In this view of the matter, we do not find this to be fit case for imposition of penalty. 9. The learned Counsel for the assessee also pointed out that the AO while initiating penalty proceedings in the assessment order noted that penalty proceedings have been initiated for furnishing of inaccurate particulars of income or concealment of particulars of income. However, in the impugned penalty orders the AO noted that he is satisfied it to be fit case for levy of penalty u/s 271 (1) ( c ) of the IT Act read with Explanation 1 for furnishing of inaccurate particulars of income and concealment of particulars of income to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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