9911796707
TMI Blog2022 (9) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... e business of manufacturing and sale of bright Bars. For the Asst.Year 2000-01 the assessee filed its return of income on 27.1.2000 declaring a loss of Rs.1,16,30,000/-. The return was processed under section 143(1) of the Act and thereafter taken up for scrutiny assessment. There was a survey action under section 133A of the Act in the business premises of the assessee on 7.3.2000. During the course of survey, few discrepancies viz. excess stock valued at Rs.20 lakhs were found; cash book was found negative; the peak of such amount comes to Rs.14,06,133/-. The AO completed assessment under section 143(3) on 17.2.2003 making the above disallowance and determined net loss at (- )Rs.65,52,807/-. Subsequently, 148-notice was also issued upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contested the aforesaid order of the Hon.ITAT, Rajkot Bench, Rajkot and thus the order of the Assessing Officer has achieved its finality. In the light of given facts, it can very well be held that the assessee had willfully furnished the inaccurate particulars of income with an intention to evade tax. Accordingly, the assessee is liable to penalty u/s. 271(1) (c) of the I.T. Act, 1961. 3. Aggrieved against the assessee, the assessee filed appeal before the ld.CIT(A). It can be seen from page no.5 of the CIT(A)'s order, assessee's reply letter dated 21.3.2013, which reads as follows: "Please refer to your letter no. ACIT/ Circle - 5/ Penalty/ BIL/ 2012- 13 dated 14-03-2013 in the above matter. 1. During the course of survey and as m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evying penalty under s. 271(1)(a) has been ignored by ITO stating that no explanation has been tendered, order levying penalty suffers from violation of principles of natural justice and vice of non-application of mind and cannot be allowed to stand." "10. As held by the apex court in the case of Tin Box Co, once the Tribunal found that the Income-tax Officer had not given to the assessee proper opportunity of being heard, whether the assessee could have placed the evidence before the appellate authority or before the Tribunal, was really of no consequence for it was the assessment order that counted : that order had to be made after the assessee had been given a reasonable opportunity of being heard. Principles of natural justice take wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of natural justice. The order would be vitiated by exercise of arbitrariness in the decision-making process and the discretion cannot be stated to have been exercised judicially. 11. There is one more aspect of the matter. When an authority is vested with discretionary powers and omits to take into consideration the explanation tendered, which has admittedly been filed in response to the show-cause notice, the order would suffer from the vice of non-application of mind when the order records that no explanation is tendered. In the present case, admittedly, it has been found by the Tribunal that though the explanation was tendered, the Income-tax Officer proceeded on the footing that no explanation was tendered and thus, it is establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en submissions in reply to show cause notice issued under section 271(1)(c) of the Act. Whereas the CIT(A) has extracted the reply dated 21.3.2013 given by the assessee in his impugned order. Thus, the order levying penalty suffers from violation of principle of natural justice and non-application of mind by the AO and the same cannot be allowed to stand. The AO has not exercised his power to levy penalty in a fair, reasonable and judicial manner. Therefore, respectfully following the jurisdictional High Court's judgment, penalty levied by the AO without considering the assessee's explanation is bad in law and hereby quashed. Thus, the ground raised by the assessee is allowed. 7. In the result, the appeal of the assessee is allowed. Order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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