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TMI Blog2019 (9) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... ny grounds at the time of hearing. The issue raised by the assessee is that the Ld. CIT (A) erred in confirming the penalty levied by the AO for Rs. 16,66,271/- u/s 271(1)(c) of the Act. 2. Brief facts of the case are that the assessee is a Limited Company and engaged in the business of manufacturing of brass flats, pipes, rods, copper tubes, etc. including the income from other sources, i.e. commission from the sale of Polyester yarn, chemicals, and engineering goods and income of job receipts. 2.1 The assessee including its directors Sunil Mardia, Suresh Shah, Sudhir R Mardia in the year under consideration was subject to search u/s 132 of the Act. The search was conducted at the factory premises of the assessee as well as the residential premises of the directors. The AO framed the assessment u/s 143(3) of the Act, among other addition, after making an addition of Rs. 41,61,920/- only representing the GP @ 10% of the sale. 2.2 On appeal the Ld. CIT (A) deleted the addition on account of lower GP. The Revenue being aggrieved preferred an appeal before the Hon'ble ITAT where GP addition was made at Rs. 2,71,350.00 being 1% of the estimated sale of Rs. 2,71,35,000/-. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as diverting its profit and reduced its GP by following the above practices. The AO further observed that the facts on the order of the ITAT as relied by the assessee in its case for A.Y. 1992-93 is different from the facts of the case in the year under consideration. Thus the AO in view of the above held that the assessee concealed its income of Rs. 13,56,750/-(i.e. 5% of Rs. 2,71,35,000/-) including declaration of loss of Rs. 14,48,420/- aggregating to Rs. 28,05,170/- only. Thus the AO imposed the penalty u/s 271(1)(c) of the Act at Rs. 16,66,271/- only being 100% of the amount of tax sought to be evaded. 3. The aggrieved assessee preferred an appeal before the Ld. CIT (A). The assessee before the Ld. CIT (A) reiterated the submission as before the AO. 4. However, the Ld. CIT (A) after examining the submission of the assessee observed that the AO levied the penalty within the time as specified under the provision of section 275(IA) of the Act which authorized him to impose the penalty after the decision of Hon'ble High Court. The Ld. CIT (A) was of the view that the Hon'ble High Court in the case of Shanti Enterprises v/s ACIT (SLP No. 5717 of 2014) has clarified the word may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of section 275(1A) by the amendment Act 2006 which will not be applied to the year under consideration as such amendment cannot be applied retrospectively. 7.2 In holding so, we find support and guidance from the order of ITAT Amritsar in the case of ITO versus Sh. K.D. Bali in ITA No. 137/ASR/2014 dated 4th of July 2016. The relevant extract of the order is reproduced below: We have heard the rival parties and ha\e gone through material placed on record, We find that Assessing Officer had initiated the penalty proceedings on 31.12.1999 but did not pass an penalty order and it was only after the Hon'ble High Court decided the issue in favor of Revenue that penalty proceedings were revh ed. From the provisions of section 275( I A), we find that the provisions were included in the Act vide amendment Act, 2006 and it was applicable from 13.07.2006 whereas the case of the asscssee relates to assessment year 1994-95, therefore, at the time of filing of return for the assessment year 1994-95 the provisions of section 275(1 A) were not applicable. The Hon'ble Supreme Cumi m the case of B.N. Sharma vs. CM reported at 226 ITR-442 (SC) has held thai the penalty imposable should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under appeal at the relevant stage and an order imposing or enhancing or reducing or cancelling penalty or dropping the proceeding for imposition of penalty passed before the appellant order is received by the Department or order of revision is passed. In such a situation, an order imposing or enhancing or reducing or canceling penalty or dropping the proceedings for the imposition of penalty may be passed on the basis of assessment as revised by giving effect to the appellate order or the revisional order. 14. However in: the present case, no order either imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty stands passed. Thai being so. the provisions of section 275(1 A) are not applicable. 15. In view of the above, the penalty order is hit by the provision to section 275(1)(a) of the Act. Going by the para-meters laid down therein in the said section, the penalty order is clearly beyond the limitation provided therein. 16. Accordingly, the penalty order is cancelled, being barred by limitation, as above." 11. In the present case, the order of the Ld.CIT(A) in the quantum appeal was passed after 1.6.2003. i.e. on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income or such person as a result thereof shall, for the purposes of Clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." 12. A bare perusal of this section would reveal that for visiting any assessee with the penalty, the Assessing Officer or the Learned CIT(Appeals) during the course of any proceedings before them should be satisfied, that the assessee has; (i) concealed his income or furnished inaccurate particulars of income. As far as the quantification of the penalty is concerned, the penalty imposed under this section can range in between 100% to 300% of the tax sought to be evaded by the assessee, as a result of such concealment of income or furnishing inaccurate particulars. The other most important features of this section is deeming provisions regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restored these additions partly, then appeal of the assessee has been admitted by the Hon'ble High Court suggesting the question of law is involved. In such type of issue it cannot be said that the explanation submitted by the assessee in support of its addition as false, proving the fact that the assessee has concealed its income. Similarly, the assessee has given explanation with regard to the issue of bogus purchases. Its explanation was accepted by the ld.CIT(A) in the quantum appeal, but such conclusions of the ld.CIT(A) did not meet the approval of the Tribunal. But again, the Hon'ble High Court has admitted question on this aspect also. Therefore, it is also debatable issue. The ld.CIT(A) has considered both these aspects in the impugned order and deleted the penalty. After going through the order of the ld.CIT(A), we do not see any reason to interfere in it. Accordingly, the appeal of the Revenue is dismissed. 14. In the result appeal of the Revenue is dismissed. In view of the above, we are not convinced with the finding of the lower authorities qua the issue of the penalty discussed above. Hence the ground of appeal of the assessee is allowed. Order pronounced in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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