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TMI Blog2005 (2) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... round vide application dt. 4th Feb., 2004. Thus, prayer of the assessee is now for admission of following additional grounds : "1. That the order of the AO imposing penalty under s. 271(1)(c) is not valid as jurisdiction to impose the same was illegally assumed by him without recording a proper satisfaction as enjoined under law. 2. That the AO imposing penalty under s. 271(1)(c) has illegally assumed jurisdiction by not appreciating that the said penalty was to be levied as per the 'law existing as on the date of filing of the original IT return', as per which law, as it then so existed, the said penalty under s. 271(1)(c) could only be levied by the 'IAC' ('Dy. CIT', w.e.f. 31st March, 1988)." The learned counsel for the assessee submitted that these are only legal grounds for which the necessary facts are already on record. Therefore, the same should be admitted. 4. The learned Departmental Representative did not raise any objection to the admission of these grounds of appeal. These grounds being purely of legal nature and all relevant facts are already on record, the same are admitted. Reliance in this regard is placed on the judgment of Hon'ble Supreme Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pportunities allowed, the AO imposed a penalty of Rs. 2,22,061 under s. 271(1)(c) by treating the unexplained investments of Rs. 2,24,995 and Rs. 3,23,996 as income for which assessee furnished inaccurate particulars. 6. Being aggrieved, the assessee challenged the levy of penalty before the CIT(A). It was submitted before the CIT(A) that the AO had made aforesaid additions merely on estimate basis. Moreover, the assessment could not have been reopened merely by relying on the valuation report. Reliance was also placed on the judgments of Hon'ble Calcutta High Court in Kajaria Investment Properties (P) Ltd. vs. ITO Ors. (2001) 170 CTR (Cal) 192 : (2001) 250 ITR 619 (Cal) and Smt. Jarawati Debi Agarwal vs. ITO (1987) 60 CTR (Cal) 183 : (1986) 162 ITR 606 (Cal). It was also contended that mere fact that additions have been upheld in appeal would not justify imposition of penalty under s. 271(1)(c). These submissions did not find favour with the learned CIT(A), who upheld the order of the AO for the following reasons : (i) It was not correct to say that the AO has made the additions merely by relying on the report of the valuation report (officer). He observed that the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be the law as it stood at the time when the original return was filed for the assessment year in question and not the law as it stood on the date on which return was filed in response to the notice under s. 148. He submitted that in the present case, the original return had been filed on 3rd Sept., 1975. Therefore, as per provisions of the law as these stood on 3rd Sept., 1975, the authority to levy penalty under s. 271(1)(c) in respect of income for which the assessee had either concealed the particulars of income or furnished inaccurate particulars thereof exceeding a sum of Rs. 25,000 vested with the IAC (now Dy. CIT). He submitted that in the present case, order for imposing penalty has been passed by an officer of the rank of Asstt. CIT after obtaining approval of the Jt. CIT. He submitted that the action of the AO for imposing penalty was without jurisdiction as the authority for the same was vested only with IAC/Dy. CIT. Thus, the order of the AO deserves to be quashed on this point itself. 6.3 He further submitted that the AO has initiated penalty proceedings without recording proper satisfaction which is sine qua non for levy of penalty. He submitted that in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was only procedural in nature. Therefore, the order for imposing penalty by an authority other than specified in the Act would result in (an) irregularity and the order cannot be quashed on this ground. 8. I have heard both the parties and given my thoughtful consideration to the rival submissions with reference to facts, evidence and material on record. From the facts discussed above, it is obvious that the assessee had filed the original return on 3rd Sept., 1975. Even though subsequently the notice under s. 148 was issued, the penalty under s. 271(1)(c) was leviable as per provisions of the Act as these stood in the statute on 3rd Sept., 1975, and not on the date when the return was filed in response to notice under s. 148. This view finds support from the judgment of Hon'ble Supreme Court in the case of CIT vs. Onkar Saran Sons and two judgments of Hon'ble Punjab Haryana High Court in the cases of CIT vs. Kashmiri Lal Kasturi Lal Co. and CIT vs. Ram Singh Harmohan Singh. As per provisions of the Act applicable to the asst. yr. 1975-76, the authority competent to levy penalty in respect of cases where income for which assessee either furnished inaccurate particulars of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case that additions were made purely on estimate basis, I find from the orders of the authorities below that the learned CIT(A) has given specific reasons to the effect that certain items of expenditure were not at all debited to the books of account. Bills and vouchers were not produced. The learned CIT(A) has held that difference in the estimation of cost of construction as shown in the books and as determined by the DVO was not based on mere estimation by the DVO, but the fact (that) certain items of expenditure were not shown in the books of account. Considering the fact that the order for imposing penalty is being quashed on another ground, I do not consider it necessary to record any finding on this ground. 9.1 As regards the last submission of the learned counsel that the impugned order has been passed without allowing proper opportunity, the same is also without any merit. The order for imposing the penalty shows that the show-cause notice issued on 20th May, 1999, sent by registered post was returned by the postal authorities as the premises were found locked. The penalty order also shows that even the learned counsel of the assessee was also contacted. He did not know ..... X X X X Extracts X X X X X X X X Extracts X X X X
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