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TMI Blog2019 (5) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Act', for various Assessment Years viz., 2000-2001 to 2005-2006 2. The Substantial Questions of Law, on which these Appeals were admitted by a Co-ordinate Bench of this Court on 13.08.2008, are quoted below for ready reference : (1) Whether the Tribunal has failed to hold that failure on the part of Assessing Officer to record his satisfaction that the Assessee had wilfully concealed his income or had furnished inaccurate particulars so as to enable him to proceed for penalty proceedings vitiates the penalty proceedings ? (2) Is the initial burden not upon the Department to prove the concealment of income especially where the Assessee had offered sufficient explanation for show cause notice to penalty ? 3. The penalty in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undry Creditors viz., (1) M/s.Polisetty Somasundaram, (2) M/s.Amaravathi Agro Exports, (3) M/s.Bommidala Int.P.Ltd., and (4) M/s.Sri Chakra and the Assessee was asked to verify the balances and reconcile the same with those parties. It was found that the balances of these four parties did not tally with the Books of Accounts of the Assessee and that party and, therefore, the same was also offered as income in the Revised Return as 'Cessation of Liability' under Section 41 (1) of the Act and the same was added as income of the Assessee and consequent penalty of 100% of the said unreconciled balances was also imposed by the Assessing Authority. 5. Learned counsel for the Assessee relied upon a number of cases and submitted before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. Consequently, penalty proceedings were initiated against the assessee under section u/s 271 (1) (c) of the Act. The Assessing Officer found the assessee's explanation unacceptable and imposed penalty. The appeal filed by the assessee was refused. The assessee then preferred appeal before the Income Tax Tribunal. The Tribunal allowed the appeal. Arising out of the order of the Tribunal, the questions noted therein were placed for consideration of the High Court. The High Court answered the questions in favour of the Revenue. Then the assessee moved the Supreme Court. The Supreme Court considered the ratio decided by the Bombay High court in the case of CIT Vs. P.M.Shah (1993) 203 ITR 792 and in the case of CIT Vs. Dharmchand L.Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was, therefore, in error in the view that it took and the Division Bench in the impugned judgment was right.' Hence, on the touchstone of these decisions and discussions, the assessee's action of paying tax and filing revised return cannot be called to be a voluntary one. The assessee had not at all cogently rebutted that his act of furnishing inaccurate and false particulars of income in original return was not meant for defrauding the Revenue. In the light of the aforesaid discussion and precedent, we do not find any infirmity in the levy of penalty in this regard. 8. In the result, these appeals by the assessee are dismissed.'' 8. Having heard the learned counsel for the parties, we are satisfied that the authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our of the Sundry Creditors. The reconciliation of the accounts of the Sundry Creditors is a routine accounting practice in day-to-day business and it was a matter for scrutiny and, therefore, the explanation of the Assessee that there were some unreconciled balances only required further examination and an opportunity was to be given to the Assessee to reconcile such account balances with creditors. Such unreconciled balances could not have been added as 'income' on account of 'Cessation of Liability' to be brought to tax under Section 41 (1) of the Act and invoking of Section 41 (1) of the Act in the present case was wholly erroneous. The said provision applies if a liability has completely ceased for Assessee, de facto an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 12. We are satisfied that the present Appeals filed by the Assessee deserves to be allowed with costs, quantified at Rs. 10,000/-, to be borne by the Assessing Authority, who passed the impugned penalty orders in the present case, namely, Mr.B.B.Rajendra Prasad, Joint Commissioner of Income Tax, Business Range VIII (I/c), Chennai-600 006, to be paid to the Appellant-Assessee within three months from today and Compliance Report should be sent to this Court. 13. Appeals filed by the Assessee are allowed with costs, as above. 14. Registry is directed to forward a copy of this order along with a copy of the impugned order of the Tribunal to President and Members concerned of Income Tax Appellate Tribunals and also to Law Secretary to the G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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