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TMI Blog2017 (2) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... Revision u/s 263 - penalty proceedings u/s 271(1)(c) - Held that:- We notice that the assessee has furnished explanations before the assessing officer during the course of penalty proceedings three times, viz., on 22.12.2011, 24.12.2011 and 15.05.2012. It is not the case of Ld CIT that the assessing officer has dropped the penalty proceedings without considering the explanations of the assessee, meaning thereby, the AO was convinced with the submissions made by the assessee and accordingly dropped the penalty proceedings. It is pertinent to note that the Ld CIT did not discuss anything about the explanations furnished by the assessee before the AO and did not show that the said explanations are not acceptable in law. Under these set of facts, we are of the view that there is merit in the contentions of the assessee that the assessing officer has taken a possible view of the matter and hence the order passed by the AO dropping the penalty proceedings cannot be considered to be prejudicial to the interest of the revenue. In view of the foregoing discussions, we are of the view that there is merit in the contentions of the assessee that the revision order passed by Ld CIT u/s 263 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rations disclosed that the assessee has made payments by way of cash to certain suppliers. The payments so made aggregated to ₹ 41,95,100/-. The assessee explained that the cash payments reflect money paid to the suppliers to enable them to supply materials without any interruption. It was submitted that the assessee would pay the cheque subsequently, upon receipt of sufficient bank balance, to the suppliers and would receive back the cash. It was submitted that book balance of cash available in various concerns were used for such kind of rotation on short term basis. The AO did not accept the said explanations and assessed the above said amount of ₹ 41,95,100/- also. 5. The Ld CIT(A) confirmed the addition of ₹ 20.00 lakhs and deleted the addition of ₹ 41,95,100/-. The revenue is aggrieved by the decision of Ld CIT(A) in granting relief to the assessee. The assessee has filed Cross objection to support the order passed by Ld CIT(A). 6. We have heard the parties and perused the record. We notice that the Ld CIT(A) has deleted the addition with the following observations:- "Secondly, as explained by the Ld A.R, the Annexure A/1 is not complete. It is only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een estimated by the Hon'ble Settlement Commission, which would cover, the unaccounted expenditure, if any. The Ld A.R also submitted that the sale of flats has commenced only in AY 2005-06 and the Settlement Commission has estimated the income of that year. Accordingly we confirm the order passed by Ld CIT(A) and reject the appeal filed by the revenue. 10. The assessee has filed C.O only to support the order passed by Ld CIT(A). Hence the same does not require adjudication. 11. We shall now take up the appeal filed by the revenue for AY 2006-07. The assessee did not respond to the notices issued by the AO during the course of assessment proceedings of the above said year. Since the assessee had accepted receipt of on-money to be in the range of 40% - 55% before the Settlement Commission, the AO estimated the on-money receipts at ₹ 1,19,87,810/- and assessed the same as income of the assessee. 12. The Ld CIT(A) noticed that the issue relating to receipt of on-money was adjudicated by the Settlement Commission in AY 2005-06 in the hands of the assessee and the Settlement Commission has worked out net profit @ 17% of the on-money receipts. It is pertinent to note that the Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has offered a sum of ₹ 24,00,000/- over and above the assessed income for AY 2004-05 before the Settlement Commission u/s 245E of the Act. As noticed earlier the Settlement Commission did not admit the application of the assessee filed for AY 2004-05. Hence the AO reopened the assessment and assessed the above said amount of ₹ 24.00 lakhs as income of the assessee. The AO also initiated penalty proceedings u/s 271(1)(c) of the Act. The assessee filed replies on 22.12.2011. 24.04.2012 and 15-05-2012 (letter dated 12.5.2012). Accordingly the assessing officer dropped the penalty proceedings. 16. The Ld CIT noticed that the AO has dropped the penalty proceedings without assigning any reason. The Ld CIT took the view that the said action of the AO is erroneous in so far as it is prejudicial to the interests of the revenue. Accordingly he initiated revision proceedings u/s 263 of the Act. The assessee pleaded that the assessing officer has applied his mind on the submissions made by the assessee and accordingly taken the decision to drop the penalty proceedings. Accordingly the assessee contended that the revision proceeding was not valid and in that regard, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... succeeding year. Accordingly he submitted that the order of Ld CIT got vitiated on this count alone. He submitted that, merely because the assessee has accepted the addition of ₹ 24.00 lakhs, it cannot be said that the income has accrued to the assessee. 20. He further submitted that the assessee has offered detailed explanations to the assessing officer; vide letters filed on 22.12.2011, 24.12.2012 and 15.05.2012 against the penalty notice issued by the assessing officer. He submitted that the assessing officer has dropped the penalty proceeding after duly considering the submissions made by the assessee, i.e., he has taken a possible view by duly applying his mind. By placing reliance on the decision of Hon'ble Supreme Court rendered in the case of Malabar Industrial Company (243 ITR 83), the Ld A.R submitted that the initiation of revision proceedings was not justified if the assessing officer has taken one of the possible view of the matter. He submitted that the Ld CIT, no where alleges in his order that there was non-application of mind on the part of the AO. Accordingly the Ld A.R submitted that the Ld CIT has taken a particular view in this matter and has thrust the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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