SMT. RISHWA RANI v. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, LUDHIANA
[Citation -2007-LL-0516-7]

Citation 2007-LL-0516-7
Appellant Name SMT. RISHWA RANI
Respondent Name ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, LUDHIANA
Court ITAT
Relevant Act Income-tax
Date of Order 16/05/2007
Assessment Year 1996-97, 2000-01
Judgment View Judgment
Keyword Tags income from house property • judicial pronouncement • concealment of income • imposition of penalty • returned income • quantum appeal • estimate basis • rental income • alv
Bot Summary: The only ground raised bythe assessee in both the appeals is upholding theimposition of penalty under section 271(1)(c)to the extent of addition upheld by the Tribunal. Assessing Officer wasmentioned that penalty notice under section 271(1)(c)has been issued separately as is evident from assessment order dated 25-3-2004whereas the penalty order is dated 18-10-2005. The said satisfaction has beenduly recorded by the Assessing Officer in the penalty order and not in theassessment order. In view of these facts, the decision of the Hon bleJurisdictional High Court in the case of MunishI r o n Store s case wherein it was clearly held that recordingof satisfaction by the Assessing Officer regarding concealment of income is acondition precedent for imposition of penalty. DR took a plea that in quantum proceedings the Tribunal has reduced theaddition, therefore penalty is leviable I am of theview that penalty proceedings and quantum proceedings are all togetherdifferent and since penalty is penal in nature, it should be construedstrictly. Right from the assessment stage it is a case ofestimation which may be up to any extent and is a matter of opinionpenalty is not leviable therefore, the decision ofthe Hon ble Jurisdictional High Court in the case of Ravail Singh Co. s casewherein the addition was made on the basis of estimate and not on concreteevidence of concealment of income, it was held that penalty is not leviable under section 271(1)(c)of the Act. Since in the present appear it wasmerely a question of estimation meaning thereby when the Assessing Officer wasnot sure of the valuation, it cannot be a case of imposition of penalty undersection 271(1)(c) because if it is opined by xperson the valuation at a particular figure and differently by other it meansboth the persons are of different opinion it may be a good case on quantum butnot of penalty because penalty should be construed strict.


1. Both these appeals are bythe assessee for different assessment years againstthe order of ld. CIT(A) dated 10-1-2007 and 9-1-2007 respectivelychallenging direction of ld. CIT(A) to impose penalty under section271(1)(c) of act to extent of additions upheld by Tribunal. 2. During arguments we haveheard Shri Ashok Goyal, ld.counsel for assessee and ShriD.P. Dhankar, ld. DR contention of ld.counsel for assessee is that substantial reliefwas given to assessee by Tribunal, nosatisfaction has been recorded by Assessing Officer, addition is merelyon basis of opinion of Assessing Officer, no concealment orfurnishing of inaccurate particulars of income has been pointed out by theAssessing Officer. Reliance was placed upon decision of Hon ble Jurisdictional High Court in case of CIT v. Munish Iron Store [2003] 263 ITR 484(Punj. & Har.). On other hand, ld.DR in nutshell kly defended orders of first appellate authority bycontending that rental income was not disclosed by assesseeand even matter was earned to Tribunal where on quantum appeal theaddition was upheld to certain extent. Reliance was placed upon decision inK.P. Mahdusudhanan v. CIT [2001] 251ITR 99 (SC). I have considered rival submissions and perused materialavailable on file. 3. only ground raised bythe assessee in both appeals is upholding theimposition of penalty under section 271(1)(c)to extent of addition upheld by Tribunal. Since facts and groundsof appeal are identical, both appeals can be disposed offby common and consolidated order. Assessment was completed under section143(3) of Act vide order dated 25-3-2004 (A.Y. 1996-97) on incomeof Rs. 2,66,560 against returned income of Rs. 1,82,630 making additionof Rs. 1,10,400 on account of income from house property which was confirmed bythe ld. CIT(A) vide appellate order dated 22-3- 2005. Likewise, income ofRs. 1,82,630 was declared in return (A.Y. 2000-01) on 27-2-2001 which wasprocessed under section 143(1)(a) of Act on 21-5- 2001 at thereturned income of Rs. 14,344. Subsequently, notice under section 143(2) wasissued and served upon assessee in response towhich assessee filed information as calledfor by Assessing Officer, contended that no satisfaction was recorded bythe Assessing Officer I have perused assessment order wherein ALV ofthe property was estimated at Rs. 24,000. T h e ld. Assessing Officer wasmentioned that penalty notice under section 271(1)(c)has been issued separately as is evident from assessment order dated 25-3-2004whereas penalty order is dated 18-10-2005. said satisfaction has beenduly recorded by Assessing Officer in penalty order and not in theassessment order. It is pertinent to mention here that satisfactionrecorded in penalty order is after decision of Tribunal on quantumappeal wherein it had been substantially reduced. Another point pertinent tomention here is that even in original assessment value has beenestimated. In view of these facts, decision of Hon bleJurisdictional High Court in case of MunishI r o n Store s case (supra) wherein it was clearly held that recordingof satisfaction by Assessing Officer regarding concealment of income is acondition precedent for imposition of penalty. In present appeal, sinceeven valuation is on estimate basis and Assessing Officer has notrecorded his satisfaction about concealment or furnishing of inaccurateparticulars of income, so, from this angle also penalty is not leviable. decision of Chandigarh Bench of Tribunalin case of Bansal Iron Scrap Co. v.ITO [IT Appeal No. 162 (Chd.) of 2006] and Durga Traders v. [2006] 154 TAXMAN (Chd.)(Mag.) relied upon. 4. During argument ld.DR took plea that in quantum proceedings Tribunal has reduced theaddition, therefore penalty is leviable I am of theview that penalty proceedings and quantum proceedings are all togetherdifferent and since penalty is penal in nature, it should be construedstrictly. At same even Tribunal has substantially reduced additionin quantum proceedings. Right from assessment stage it is case ofestimation which may be up to any extent and is matter of opinion, therefore,penalty is not leviable therefore, decision ofthe Hon ble Jurisdictional High Court in case of Ravail Singh & Co. s case (supra)wherein addition was made on basis of estimate and not on concreteevidence of concealment of income, it was held that penalty is not leviable under section 271(1)(c)of Act. It is pertinent to mention here that while coming to this conclusion.The Hon ble court considered decision of FullBench of same High Court in case of VishawkarmaIndustries (supra). ld. DR, duringargument, placed reliance upon decision of Hon bleApex Court in case of K.P. Madhusudan s case(supra) wherein Explanation to section 271(1)(c) washeld to be part of section 271 on issuance of notice. It was held that with theissuance of notice Assessing Officer made assesseeaware that provisions thereof are to be used against him. Since in thepresent appeal, addition is based on estimation. I am of humble opinionthat this judicial pronouncement may not help revenue being different onfacts. 5. For imposition of penaltyunder section 271(1)(c) definite finding aboutconcealment is necessary. For this proposition, reliance can be drawn from thedecision of Hon ble Madras High Court pronounced inthe case of CIT v. K.R. Chinni Krishna Chetty [2000] 246 ITR 121 (SC) may be referred. expressions hasconcealed particulars of income and has furnished inaccurate particularsof income have not been defined either in section 271(1)(c)or elsewhere in Act. One thing is certain that these two circumstances arenot identical in details although they may lead to same effect namelykeeping off certain portion of income. Since in present appear it wasmerely question of estimation meaning thereby when Assessing Officer wasnot sure of valuation, it cannot be case of imposition of penalty undersection 271(1)(c) because if it is opined by xperson valuation at particular figure and differently by other it meansboth persons are of different opinion it may be good case on quantum butnot of penalty because penalty should be construed strict. So from this anglealso penalty is not leviable in view of these factsand circumstances I allow appeals of assesseeby deleting remaining penalty. *** SMT. RISHWA RANI v. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, LUDHIANA
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