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TMI Blog1990 (2) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... tal of sundry debtors has been shown less than that as per seized book by 19,278 and the total of sundry creditors has been increased by Rs. 10,573 over the amount as per seized books and hence these are added as suppressed income of the business. " 2. The ITO also initiated proceedings u/s 271(1)(c) of the Act and asked the assessee to show cause why penalty under the above provisions should not be imposed. The assessee in the written reply stated "that the addition made by you are all on estimate. I had not concealed any particulars of income. No penalty is imposable for the additions made on estimate". The ITO was not satisfied with the above explanation. He referred to the assessment order where a sum of Rs. 29,851 was added and held that the assessee was not able to explain the discrepancies even in appeal. He further observed that since the assessment year 1975-76 the assessee was being assessed u/s 143(1) so he deliberately concealed particulars of his income this year inflating creditors and deflating sundry debtors with expectation that assessment would be completed u/s 143(1) of the Act without going through account books. The ITO held that the assessee tried to conceal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). 5. Shri G.P. Agarwal, learned counsel for the assessee supported the order of the AAC. He submitted that a penalty order in which the amount of penalty levied was not specified was bad in law and no notice of demand could be issued on the basis of such an order. He relied upon decision of Hon'ble Bombay High Court in the case of N.N. Kotak v. CIT [1952] 21 ITR 18 and of Jammu and Kashmir High Court in the case of S. Mubarik Shah Naqshbandi v. CIT [1977] 110 ITR 217. 6. We have carefully considered the rival submissions, facts and circumstances of the case, statutory provisions and case laws referred to before us. It is not in dispute that in the order passed by the Assessing Officer on 6-9-1985 no amount of penalty levied was stated. The question before us is as to what is the effect of non-mention of amount in the order dated 6-9-1985. To determine the above question we must take into account the following provisions which were in force at the relevant time: Section 271(1): If the Income-tax Officer or the Appellate Assistant Commissioner [or the Commissioner (Appeals)] in the course of any proceedings under this Act, is satisfied that any person--- (a) (b) (c) has co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other case, after the expiration of two years from the end of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed. On consideration of section 271 with section 275, little doubt is left that the order imposing a penalty within the limitation prescribed under section 275 is the direction that "such person shall pay by way of penalty" sum specified in addition to any tax payable by him. It follows as a necessary corollary that every penalty order must give a direction to the defaulting assessee to pay the sum specified there in addition to the tax payable. If amount of penalty is not specified, there is no direction and no penalty order. It is no doubt true that for assumption of jurisdiction to levy penalty under sub-section (1)(i)(c), the Assessing Officer must record satisfaction to the effect that the assessee concealed income or furnished inaccurate particulars of income and in this case the Assessing Officer satisfied the above requirement and assumption of jurisdiction cannot be questioned. But why assume jurisdiction if no additional sum was to be specified? The very purpose of assumption of j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 months in filing the return; (ii) the Income-tax Officer, the Appellate Assistant Commissioner and also the Tribunal held that the excuse given for the delay in filing the return was not a reasonable cause as contemplated by section 271(1)(a) of the Income-tax Act, 1961; (iii) where the basis of the calculation of the penalty has been laid down in the statute itself and, more so, where the quantum has been fixed as in section 271(1)(a)(i), there could be no legal requirement for the Income-tax Officer to indicate what was the basis for his calculation, since a mere reference to the statutory provision and the incontroverted facts apparent from the records would make the position abundantly clear. Therefore, the Income-tax Officer's order imposing the penalty could not be assailed on the grounds mentioned in the Tribunal's order. " In our opinion, the above cited decision cannot advance the case of the revenue. For purposes of section 271(1)(a)(i) it may not be necessary to give basis of calculation of penalty imposed since the penalty has to be calculated as per statutory provisions. But the decision as reported does not suggest that penalty order did not mention the quantu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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