Commissioner Of Income Tax I, Ludhiana v. M/S Amiro International, Ludhiana

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. ITA No.86 of 2010 Date of decision: 26.7.2010 Commissioner of Income Tax I, Ludhiana -----Appellant Vs. M/s Amiro International, Ludhiana ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE RAJESH BINDAL Present:-Mr. Vivek Sethi, Standing Counsel for the revenue. Adarsh Kumar Goel,J. 1.This appeal has been filed under section 260A of theIncome Tax Act, 1961 (for short, ‘the Act’) against order dated20.7.2009 passed by the Income Tax Appellate Tribunal, ChandigarhBench ‘A’, Chandigarh in ITA No.320/Chandi/2008, for assessmentyear 1990-91, proposing to raise following substantial questions oflaw:- “i) Whether in the facts and circumstances of the case theHon’ble ITAT has erred in law in upholding the decisionof CIT(A) deleting the penalty levied ignoring the factthat the assessee had furnished inaccurate particularsregarding the sale before the Assessing Officer? ii) Whether in the facts and circumstances of the case theHon’ble ITAT has erred in law in deleting the penalty when the additions made by the Assessing Officer werenot on account of voluntary disclosure by the assessee? iii) Whether in the facts and circumstances of the case theHon’ble ITAT has erred in law in ignoring the fact thatthe concealment of income has been duly quantified bythe Assessing Officer in the assessment order after duediligence and the assessee had no alternative but tosubsequently surrender the sale outside the books ofaccount computed by the Assessing Officer?” 2. The assessee is a partnership firm engaged in manufactureand export of chain wheels. Against addition to the declared income,matter was taken to the Income Tax Appellate Tribunal, who remandedthe matter for giving due opportunity to the assessee. At the time offresh assessment, the assessee surrendered sales to the tune of Rs.5.15lacs outside the books of account stating that he wanted to avoidlitigation on the issue. The Assessing Officer after making addition onthat basis also levied penalty holding that the assessee had furnishedinaccurate particulars of income which led to surrender of the saleturnover which amounted to admission of default. On appeal, the CIT(A) set aside the finding on the issue of penalty with the followingobservations:- “It is settled position of law by now that assessment andpenalty proceedings are separate and independentproceedings. Therefore, penalty under section 271(1)(c)could not be validly levied just because any additionshave been made at the time of assessment. In thesurrender letter of the appellant certain sales have been “It is settled position of law by now that assessment andpenalty proceedings are separate and independentproceedings. Therefore, penalty under section 271(1)(c)could not be validly levied just because any additionshave been made at the time of assessment. In thesurrender letter of the appellant certain sales have been admitted to be made outside the books of accounts.Though such a statement could be validly made the basisfor making addition in a case, this alone could not be thebasis for levying penalty under section 271(1)(c). Forlevying penalty as above, the AO was required to provethat the appellant did make such sales outside the booksof accounts. Such evidence was all the more necessarywhen during penalty proceedings before the AO theappellant was duly contending that no such sales outsidethe books of accounts were actually made by him andthat the addition was admitted just to avoid litigation andto buy peace of mind taking into account the matter beingso old and he himself being so old etc. Admittedly suchevidence having not been brought on record penaltyunder section 271(1)(c) could not be levied in the factsand circumstances of appellant’s case. Another aspect ofthe case brought out by the learned counsel is also quiteimportant. When the entire facts and record was availableand even the statement of one person Shri Vijay Jain, towhom the appellant had claimed to make certain scrapsale, was recorded by the Assessing officer in the remandreport, the addition made was deleted by the CIT(A).Therefore, the contention of the learned counsel thatthere was another opinion as per which no such additionwas called for is also not without force. Keeping in viewthat position also when there could be a difference ofopinion on the issue of addition itself, there could not beany penalty under section 271(1)(c) in respect of suchaddition.” 3.The above view was upheld by the Tribunal. 4.We have heard learned counsel for the appellant. 5.It cannot be disputed that issue on which the assessee madea statement admitting sale was a debatable issue and the addition wassought to be made by drawing an inference. In such circumstances,mere fact that the assessee surrendered the amount having regard to thefact that the litigation was continuing for 13 years and he was aged 90,as noted in the impugned order, it could not be held that there wasconcealment of income. In any case, concurrent finding of factrecorded by the CIT(A) and the Tribunal is certainly a possible view.6.No substantial question of law arises.7.The appeal is dismissed. (Adarsh Kumar Goel) Judge July 26, 2010‘gs’ (Rajesh Bindal) Judge