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TMI Blog2003 (10) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... d surrendered commission income before the Settlement Commission for the asst. yrs. 1979-80, 1980-81 and 1981-82 and agreed that commission be assessed at 1-1/2 per cent." 3. In the light of above, reassessments were initiated for five years under consideration. 4. In the reassessment proceedings, the assessee maintained that the assessee earned commission @ 1 per cent only. However, no books of accounts were produced. The AO rejected the above claim and the additions were made in the hands of the assessee in all the five years and commission receipts were taken @ 1-1/2 per cent against 1 per cent disclosed by the assessee. The addition was confirmed in appeals by the first appellate authority. 5. The assessee filed appeals before the Tribunal for the asst. yrs. 1974-75, 1975-76, 1976-77 and 1978-79 but Tribunal vide their order dt. 20th July, 1994, confirmed the reassessments. As regards addition in quantum, the Tribunal observed as under: "As regards the quantum of additions made by the AO, the learned counsel for the assessee has not addressed us. We further noticed that the figures of sale have been collected from the Sales-tax Department and there appears to be no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on higher commission @ 1-1/2 per cent in subsequent assessment years and other commission agents were showing commission @ 1-1/2 per cent. 11. On appeals by the assessee against the levy of penalty, learned CIT(A) felt that the facts noted by the AO in the assessment order, were sufficient to uphold the levies. It is recorded in the above order that the appellant's counsel, during the course of appellate proceedings stated that commission was chargeable at price of goods and that expenses included in the receipt like weighment charges, majdoori, etc., were to be deducted from the amount on which commission was to be calculated. The assessee filed copies of accounts duly verified by the Secretary, Market Committee, Jagraon, in which commission, after excluding various expenses, worked out to 1 per cent of receipts. However, reports of the AO showed that accounts then produced were different from the accounts produced before the AO. The AO further examined Shri Onkar Dass, mandi supervisor of Market Committee, who in his statement confirmed the accounts submitted by the assessee but did not produce relevant books on the basis of which above accounts were certified. All the details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case. In this connection, learned counsel for the assessee drew our attention to the decision of Hon'ble Bombay High Court in the case of CIT vs. Smt. Kaushalya Ors. (1995) 216 ITR 660 (Bom). It was, accordingly prayed that the penalty imposed be cancelled. Learned Departmental Representative for the Revenue supported the impugned order of CIT(A). 13. We have given careful thought to the rival submissions of the parties. The penalties imposed for various assessment years under s. 271(1)(c) are as under: Assessment year Amount (Rs.) 1974-75 34,350 1975-76 26,990 1976-77 29,200 1977-78 16,700 1978-79 62,282 14. Two aspects involved in these cases may be kept in view. First being the additional evidence sought to be produced by the assessee and by the AO during the course of appellate proceedings in the shape of accounts authenticated by the Market Committee, Jagraon. The CIT(A) asked the AO to verify the additional evidence produced before him. In response to above and in his letter dt. 13th July, 1998, the AO wrote as under: "So far as verification of figures of sale, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on offered by the assessee was bona fide or it was a case of failure to substantiate the explanation or on account of other circumstances mentioned therein, the Explanations were attracted or not attracted in these cases. The position remained unaltered when proceedings were taken by the appellate authority. 17. In the case of CIT vs. Kaushalya Ors., their Lordships of Bombay High Court held as under: "That the notice for the asst. yr. 1967-68 was issued on 28th March, 1972. This show-cause notice was issued even before the assessment order was made. The assessee had no knowledge of the exact charge of the Department against him. In the notice not only was there use of the word 'or' between. the two groups of charges but there was use of the word 'deliberately'. The word 'deliberately' did not exist in s. 271(1)(c) when the notice was issued. The notice clearly demonstrated nonapplication of mind on the part of the IAC. The vagueness and ambiguity in the notice had also affected the right of reasonable opportunity of the assessee since he did not know what exact charges he had to face. In this background, quashing of the penalty proceedings for the asst. yr. 1967-68 was ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there is no material to show that the assessee in the period under consideration charged commission @ 1-1/2 per cent or in other words the probability that assessee charged commission @ 1 per cent on facts is not ruled out. 19. We are inclined to examine the question whether there is any material on record to hold that the assessee concealed particulars of income under the main provisions of s. 271(1)(c). This question is naturally connected with the question as to what is the material on which assessment and penalty orders are based. 20. Two circumstances taken into account by the AO for reopening the assessment proceedings and for making addition which ultimately led to levy of penalty under s. 271(1)(c), have already been noted. Whether above circumstances are sufficient to justify the levy of penalty is to be considered in the light of the following decisions. 21. In the case of Banshi Dhar Onkarmall vs. CIT (1953) 23 ITR 353 (Ori), Hon'ble Orissa High Court has held as under: "That to base an assessment barely on a presumption relating to capital fund to exist in some previous years was unwarranted. 'Past history' might be legitimate material, but that was not su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also referable to that assessment year, concealment of income cannot be inferred, once it is shown that there is an accretion to wealth disproportionate to the income assessed during the relevant year, it is' for the assessee to prove that the acquisition was not with the income received during the assessment year in question." 25. In the case of Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 (SC), their Lordships of Hon'ble Supreme Court emphasised that mere possibility of appellant's earning a considerable amount in the account year was a matter of pure conjecture and the fact that the appellant indulged in speculation, did not lead to inference that the profit in speculative transaction were earned. 26. It is evident from above that the assessing authority is bound to collect some evidence/material of the assessment year in which the addition is proposed to be made. The mere fact that the assessee was charging higher commissions and the same was assessed by the Settlement Commission, in the subsequent years is no material for. addition in the period under consideration. Likewise, mere fact that other commission agents at Jagraon were charging commission @ 1-1/2 per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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