9911796707
TMI Blog1995 (5) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's shop. (ii) 32,000 in respect of certain loose chits found from the residence of Shri Ram Pal partner. (iii) 63,000 value of silver found in excess at the assessee's shop (iv) 50,000 to cover up any items including the value of `nags' Rs. 10,000 . 6,05,000 total surrender in the firm's hands B. In the hands of Shri Ram Pal Partner: (i) 1,26,000 value of 405 grams of gold jewellery found at the first floor of the shop (ii) 1,00,000 on account of household articles,, etc. (iii) 3,28,314 value of ornaments found in locker as per valuer's report . 5,14,314 total surrender in the hands of Shri Ram Pal partner C. In the hands of Shri Narinder Kumar Partner: (i) 1,24,000 value of 400 grams of gold ornaments found at the first floor of the shop (ii) 1,25,000 on account of household articles and loose chits (iii) 40,000 value of jewellery found in the locker . 2,89,400 total surrender in the hands of Shri Narinder Kumar partner 3. While ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee firm. A sum of Rs. 1,26,000 was assessed on a protective basis in the hands of Shri Ram Pal partner on the ground that he had made a surrender of this amount in his hands. No protective assessment in respect of the amount of Rs. 1,24,400 was, however, made in the hands of Shri Narinder Kumar partner. At the appellate stage, Shri Ram Pal partner submitted in his individual case before the learned CIT(A) that he had no objection to the addition of Rs. 1,26,000 being deleted from his hands and being assessed in the hands of the assessee firm. Since the Assessing Officer had not made similar addition of Rs. 1,24,400 in the hands of Shri Narinder Kumar partner, no such situation arose in the appellate proceedings before the learned CIT(A). It is in this manner that an addition of Rs. 2,50,580 came to be made in the hands of the assessee firm. 5. The Assessing Officer initiated penalty proceedings under s. 271(1)(c) in respect of the additions of Rs. 90,097 and Rs. 2,50,580 and imposed a penalty of Rs. 1,83,965 vide order dt. 19th Nov., 1992. 6. The learned CIT(A), however, held that penalty was not imposable under s. 271(1)(c) of the Act in respect of the addition of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether penalty in respect of the aforesaid addition of Rs. 2,50,580 was exigible in the hands of the assessee-firm or not. Shri Sudhir Sehgal, the learned counsel for the assessee, vehemently argued that all the amounts surrendered by the assessee-firm and the two partners were accepted by the Revenue in one form or the other. It was pointed out that only two departures were made in respect of the income of Rs. 90,097 and Rs. 2,50,580 which have been discussed hereinabove. It was submitted that the Department had not found out anything and that the basis of penalty was what had been surrendered by the assessee-firm and the two partners. It was submitted that the surrender was made by the assessee-firm and the partners only to purchase peace of mind. It was also submitted that the partners in good faith had offered amounts of Rs. 1,26,000 and Rs. 1,24,400 in their hands because the tax effect was more beneficial to the Revenue. It was, for instance, submitted with reference to the paper book at page 9 and 10 that the total tax effect of the additions of Rs. 2,50,580 if offered in the hands of the firm was of the order of Rs. 7,66,180 whereas if the amounts of Rs. 1,26,000 and Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer had not imposed any penalty on the other amounts offered by way of surrender either in the hands of the firm or in the hands of the partners and that it was only in respect of the two amounts of Rs. 2,50,580 and Rs. 90,097 that the Assessing Officer had departed from the norms and imposed the penalty. It was submitted that the total surrender made by the assessee-firm and the partners had been accepted by the Revenue in one shape or the other and that no additional information had been brought on record to justify the levy of penalty. It was also submitted that the evidence may be sufficient for making an assessment in the hands of the assessee-firm but not for levy of penalty under s. 271(1)(c) of the Act. 10. Relying on the Bombay High Court decision in the case of CIT vs. Haji Gaffar Haji Dada Chini (1987) 63 CTR (Bom) 130 : (1988) 169 ITR 33 (Bom), it was submitted that the assessee's agreement to the income of Rs. 2,50,580 being assessed in the hands of the assessee-firm cannot be treated an admission of concealment of income in the hands of the assessee-firm. 11. Relying on the Punjab Haryana High Court decision in the case of CIT vs. Jagir Singh (1985) 44 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed bona fide and placed all facts and material relating to computation of its total income, no penalty under s. 271(1)(c) was exigible. In short, it was submitted that there was no justification for imposing penalty in respect of the addition of Rs. 2,50,580. 15. The learned Departmental Representative relied on the order of the learned CIT(A) on the point. 16. We have carefully considered the rival submissions as also the facts on record. One thing that immediately strikes us is that, in the present case, the Department has based the levy of penalty on what had been surrendered by the assessee either in the hands of the firm or in the hands of the partners, and that no independent material has been brought on record to justify the levy of penalty in respect of the addition of Rs. 2,50,580. The aforesaid amount had been surrendered by the two partners in their individual hands but the Revenue in its wisdom did not accept the plea of the partners in that regard and foisted the addition in the hands of the assessee-firm. It had been demonstrated by the learned counsel for the assessee that had the partners' plea been accepted, the Department would have benefited to the extent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) is of a different genre. The mere fact that the assessee-firm and the partners agreed to the addition of Rs. 2,50,580 being made in the hands of the assessee-firm by deleting the additions from the total income of the individual partners does not mean any admission of concealment on the part of the assessee as held by various authorities cited by the learned counsel for the assessee. The recording of various statements and the surrender of various amounts in the hands of the partners as well as the assessee-firm clearly exhibit the anxiety of the assessee-firm and the partners to put a stop to interminable litigation involved in such matters/and the assessee-firm should not be penalised for coming forward and agreeing that the additions instead of being made in the hands of the individual partners be made in the hands of the assessee-firm. 17. Penalty under s. 271(1)(c) has to be levied or justified on the facts and circumstances of each case. After going through the facts and circumstances of the present case, we have no hesitation to say that penalty under s. 271(1)(c) in the present case on the addition of Rs. 2,50,580 was not justified. We hold accordingly. The penalty lev ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
