INCOME TAX OFFICER v. LAXMI BHANDAR
[Citation -1984-LL-0808-6]

Citation 1984-LL-0808-6
Appellant Name INCOME TAX OFFICER
Respondent Name LAXMI BHANDAR
Court ITAT
Relevant Act Income-tax
Date of Order 08/08/1984
Assessment Year 1974-75
Judgment View Judgment
Keyword Tags criminal proceedings • statutory obligation • concealed income • quantum appeal
Bot Summary: The quantum appeal was also dismissed by the AAC. The ITO issued a show cause notice to the assessee but it failed to advance any cogent reason to show that it did not conceal that part of its income. On appeal before the AAC it was contended that in the order of the AAC in the quantum appeal it has not proved to the hilt that the said credit of Rs. 5,200 represented concealed income of the assessee and the ITO was not justified in leaving penalty simply because the addition was sustained by the AAC in the quantum appeal. After considering the facts and circumstances of the case and the authorities relied upon by the assessee, the AAC came to the conclusion that the contumacious and dishonest intent of the assessee has not been established by the department and it is not enough to levy penalty on the assessee if the AAC in the quantum appeal has confirmed the addition. The Departmental Representative contended before us that the AAC was not justified in cancelling the penalty imposed by the ITO. He supported the order of the ITO and urged that the order of the AAC may be quashed and that of the ITO may be restored. We have considered the submission of the parties in the light of the above finding of the AAC. We have gone through the orders of the ITO and the AAC in the assessment and quantum appeal. On appeal, the AAC confirmed the addition and it is true that the assessee did not prefer any appeal against that order. The confirmation of addition in the quantum appeal is not sufficient to levy or confirm the penalty and the AAC was perfectly correct in his conclusion.


This appeal by department is directed against AAC's order dt. 19th March 1982 cancelling penalty of Rs. 5,200 imposed by ITO for concealment of income under s. 271(1)(c) of IT Act. ITO while completing original assessment found that sum of Rs. 5,200 was credited in name of Sri R. B. Sahu of Mobarakpur and after due verification he came to conclusion in assessment order that transaction was no genuine and accordingly he added as sum of Rs. 5,200 in income of assessee as concealed income. Proceedings were initiated under s . 271(1)(c) r/w s. 274. quantum appeal was also dismissed by AAC. ITO issued show cause notice to assessee but it failed to advance any cogent reason to show that it did not conceal that part of its income. ITO accordingly levied penalty of Rs. 5,200 under s. 271(1)(c). On appeal before AAC it was contended that in order of AAC in quantum appeal it has not proved to hilt that said credit of Rs. 5,200 represented concealed income of assessee and ITO was not justified in leaving penalty simply because addition was sustained by AAC in quantum appeal. Before AAC, assessee relied upon decision in case of CIT vs. Gopal Vastralaya (1979) 13 CTR (Pat) 330: (1980) 122 ITR 527 (Pat). He also relied on decision of Hindustan Steel Ltd. vs. State of Orrisa (1972) 83 ITR 26 (SC). After considering facts and circumstances of case and authorities relied upon by assessee, AAC came to conclusion that contumacious and dishonest intent of assessee has not been established by department and it is not enough to levy penalty on assessee if AAC in quantum appeal has confirmed addition. On consideration of these facts he cancelled penalty levied by ITO under s. 271(1)(c) of Act. Feeling aggrieved by order of AAC department has come up in second appeal before us. Departmental Representative contended before us that AAC was not justified in cancelling penalty imposed by ITO. He supported order of ITO and urged that order of AAC may be quashed and that of ITO may be restored. On other hand authorised representative submitted before us that AAC was perfectly justified in concealing penalty because there was not material before ITO to hold that department succeeded in establishing that there was contumacious and dishonest intent of assessee. assessee relied upon authorities reported in (1984) 145 ITR 225 (Pat) (CIT vs. Chotanagpur Glass Works), (1974) 94 ITR 505 (P&H) (Addl. CIT vs. Karnain Singh V. Kaleran), 1975 CTR (Pat) 25: (1977) 106 ITR 452 (Pat) (CIT vs. Patna Timber Works). AAC in first appellate order concluded as under: "I have considered submission and have pursued case records also. I find considerable force in arguments given by learned counsel. To my mind, order imposing penalty for failure to carry out statutory obligation is result of quasi criminal proceedings, and penalty will not ordinarily be imposed unless party obliged, either acted deliberately in defiance of law or was guilty of conduct constructions or dishonest or acted in conscious disregard of its obligation. In instant case contumacious and dishonest intent of assessee has not bee established by department. assessee's only lapse is that he did not contest sustenance of addition in further appeal. It has been clearly held in CIT vs. Khoday Eshwara & Sons 1972 CTR (SC) 295: (1972 83 ITR 369 (SC) that department must have before it, before levying penalty, cogent materials or evidence from which it could be inferred that assessee has consciously concealed particulars of his income. NO doubt, as held in said judgment, original assessment proceedings for computing tax may be good item of evidence in penalty proceedings but penalty, cannot be levied solely on basis of reasons given in original order of assessment. Considering all these facts and also considering assessee's reliance on decision in case of CIT vs. Gopal Vastralaya, Patna High Court, penalty imposed amounting to Rs. 5,200 is hereby by cancelled." We have considered submission of parties in light of above finding of AAC. We have gone through orders of ITO and AAC in assessment and quantum appeal. ITO disbelieved deposit of Rs. 5,200 in accounts of Sri Ram Bilas Sahu of Mobarakpur on ground that Shri Sahu could not satisfy ITO in this regard. ITO was of opinion that Sri Ram Bilas Sahu would have been in position to grow jute, there would have been instances of further sale because Sri Sahu contended before ITO that prior and subsequent to transaction in question it did not sell jute to anybody and ITO on these facts drew inference that nobody would wait for 8 months in respect of goods supplied after purchasing from market. He, therefore concluded that transaction was not genuine and accordingly he included sum of Rs. 5,200 in income of assessee. On appeal, AAC confirmed addition and it is true that assessee did not prefer any appeal against that order. confirmation of addition in quantum appeal is not sufficient to levy or confirm penalty and AAC was perfectly correct in his conclusion. department has to establish something more that there was deliberated concealment on part of assessee and assessee concealed particulars of income with dishonest intention. We find that department has not discharged its onus. Therefore, AAC was perfectly justified in cancelling penalty. Having considered entire facts and circumstances of case, we accordingly of case, we accordingly confirm finding of AAC and dismiss departmental appeal. *** INCOME TAX OFFICER v. LAXMI BHANDAR
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