M/s. Tube Investments of India Ltd., CHENNAI v. ACIT, CHENNAI

ITA 1757/CHNY/2010 | 1998-1999
Pronouncement Date: 09-09-2011 | Result: Dismissed

Appeal Details

RSA Number 175721714 RSA 2010
Assessee PAN AAACT1240H
Bench Chennai
Appeal Number ITA 1757/CHNY/2010
Duration Of Justice 10 month(s) 19 day(s)
Appellant M/s. Tube Investments of India Ltd., CHENNAI
Respondent ACIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 09-09-2011
Date Of Final Hearing 03-08-2011
Next Hearing Date 03-08-2011
Assessment Year 1998-1999
Appeal Filed On 20-10-2010
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI D BENCH CHENNAI. BEFORE SHRI.U.B.S. BEDI J.M. & SHRI. ABRAHAM P. GE ORGE A.M. I.T.A. NO. 1757/MDS/2010 ASSESSMENT YEAR: 1998-99 M/S. TUBE INVESTMENTS OF INDIA LTD. DARE HOUSE #234 NSC BOSE ROAD CHENNAI 600 001. [PAN: AAACT1240H] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX LARGE TAX PAYER UNIT CHENNAI 600 101. (APPELLANT) (RESPONDENT) I .T.A. NO. 1920/MDS/2010 ASSESSMENT YEAR: 1998-99 THE DEPUTY COMMISSIONER OF INCOME TAX LARGE TAX PAYER UNIT CHENNAI 600 101. VS. M/S. TUBE INVESTMENTS OF INDIA LTD. DARE HOUSE #234 NSC BOSE ROAD CHENNAI 600 001. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY VOHRA REVENUE BY : SHRI ANIRUDH RAI CIT- DR ORDER PER U.B.S. BEDI J.M. THESE CROSS APPEALS ONE BY THE ASSESSEE AND OTHE R BY THE DEPARTMENT ARE DIRECTED AGAINST THE ORDER PASSED BY THE LD. CI T(A) LTU CHENNAI DATED 19.08.2010 RELEVANT TO THE ASSESSMENT YEAR 1998-99 AND CHALLENGE OF THE ASSESSEE IS AGAINST SUSTENANCE OF PART PENALTY UND ER SECTION 271(1)(C) BY RESTRICTING IT WITH REGARD TO ADDITIONS OF ` .1.66 CRORES AND ` .1.2 CRORES WHEREAS IN THE APPEAL OF THE DEPARTMENT THE REVENUE HAS CHALL ENGED DELETION OF PENALTY WITH I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 2 RESPECT TO 2 ND ADDITION OF ` . 1.20 CRORES OUT OF TOTAL PENALTY OF ` .2 13 15 000/- IMPOSED UNDER SECTION 271(1)(C) BY THE ASSESSING OF FICER. 2. THE ASSESSEE HAS RAISED IN ALL THREE GROUNDS F IRST IN RELATION TO TIME LIMITATION IN IMPOSING PENALTY AND NON-RECORDING OF PROPER SATISFACTION SECOND IN RELATION TO SUSTENANCE OF PENALTY AGAINST ADDITION OF ` .1.66 CRORES AND ` .1.20 CRORES AT 125% AGAINST 150% IMPOSED BY THE ASSESSIN G OFFICER AND THIRD ISSUE IS WITHOUT PREJUDICE TO ABOVE GROUNDS FOR RESTRICTING PENALTY AT 100%. 3. AS REGARDS FIRST ISSUE IN RELATION TO THE APPE AL OF THE ASSESSEE FACTS INDICATE THAT THE ASSESSEE COMPANY HAD FILED ITS RE TURN OF INCOME FOR THE ASSESSMENT YEAR 1998-99 ON 30.11.1998 DECLARING TOT AL INCOME OF ` .1 46 86 704/- AND PROFIT UNDER SECTION 115J AT ` .4 04 28 085/-. ORIGINAL ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 27.03.2001. SUBSEQU ENTLY REASSESSMENT UNDER SECTION 143(3) R.W.S. 147 WAS COMPLETED ON 27.03.20 06 BY MAKING THE FOLLOWING ADDITIONS: 1) CAPITAL GAINS ON SALE OF WIND TURBINES/SURRENDER OF RIGHTS IN THE CONTRACT ` .58 85 41 252/-. 2) INCOME ON ACCOUNT OF SET OFF OF CREDIT ` .33 87 06 625/-. 3) DISALLOWANCE OF ELECTRICITY CHARGES CLAIMED ON W IND MILLS ` .59 56 238/-. 4) UNACCOUNTED LEASE SYNDICATION CHARGES ` .1 66 00 000/-. 5) LEASE RENT RECEIVED FROM M/S. WESCARE (INDIA) LT D. ` .1.2 CRORES. 6) UNACCOUNTED LEASE SYNDICATION AMOUNT OF DLWL COM PANY ` .1.2 CRORES. 3.1 ON THE APPEAL FILED BY THE ASSESSEE THE FOLLOW ING ADDITIONS WERE CONFIRMED BY THE LD. CIT(A) VIDE ORDER ITA NO.139/2006-07/TR/ 16/A-VIII DATED 30.03.2007: I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 3 1) UNACCOUNTED LEASE SYNDICATION CHARGES ` .1 66 00 000/-. 2) UNACCOUNTED LEASE RENT RECEIVED FROM M/S. WESCAR E (INDIA) LTD. ` .1.20 00 000/-. 3) UNACCOUNTED LEASE SYNDICATION AMOUNT OF DLWL COM PANY ` .1 20 00 000/-. 3.2 AGGRIEVED THE ASSESSEE AS WELL AS THE DEPARTME NT HAD FILED THEIR RESPECTIVE APPEALS BEFORE THE ITAT CHENNAI AGAINST THE ABOVE ORDER OF THE LD. CIT(A). THE ITAT VIDE ORDER IN ITA NO. 1454/MDS/200 7 DATED 09.01.2009 DISMISSED THE CASE OF THE ASSESSEE. THEREAFTER THE ASSESSING OFFICER HAS LEVIED THE PENALTY OF ` .2 13 15 000/- @ 150% OF TAX SOUGHT TO BE EVADED UN DER SECTION 271(1)(C) ON THE ISSUES CONFIRMED BOTH BY THE LD. C IT(A) AND THE ITAT FOR CONCEALMENT OF INCOME DUE TO THE FACT THAT THE CONC ERNED ADDITIONS WERE MADE IN THE REASSESSMENT ORDER BASED ON THE SURVEY UNDER SE CTION 133A CONDUCTED BY THE DEPARTMENT IN ASSESSEES BUSINESS PREMISES. 4. AGGRIEVED BY THIS ORDER OF THE ASSESSING OFFICE R THE ASSESSEE BESIDES CHALLENGING THE PENALTY ORDER ON MERITS AS WELL AS ON TIME LIMITATION IT ALSO CHALLENGED FOR NON-RECORDING OF SATISFACTION. THE L D. AR ARGUED THAT THERE IS NO PROPER SATISFACTION RECORDED DURING ASSESSMENT AND MOREOVER THE IMPUGNED PENALTY ORDER IS BARRED BY LIMITATION UNDER SECTION 275 AS THE PENALTY ORDER WAS PASSED AFTER THE EXPIRY OF ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER OF THE LD. CIT(A) WAS RECEIVED BY THE ASSESSI NG OFFICER. IN SUPPORT OF THE SAME THE ASSESSEE HAS RELIED ON THE PROVISO TO SEC TION 275(1)(A) WHICH CONTAINS PROVISIONS OF LIMITATION TO PASS ORDER IMPOSING PEN ALTY UNDER SECTION 271(1)(C) AND REFERENCE WAS MADE TO ASSESSMENT ORDER AS NO SPECIF IC SATISFACTION ABOUT EACH I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 4 ITEM OF CONCEALMENT IS THERE SINCE IN THE CASE OF THE ASSESSEE THE ORDER OF THE LD. CIT(A) DATED 30.03.2007 WAS RECEIVED BY THE ASSESSI NG OFFICER ON 12.04.2007. SO ACCORDING TO THE LD. AR THE PERIOD OF LIMITATI ON TO PASS THE PENALTY ORDER EXPIRES ON 31.03.2009 WHEREAS THE IMPUGNED ORDER H AS BEEN PASSED THEREAFTER ON 17.06.2009. HENCE THE ORDER IS BARRED BY LIMITA TION. THE ASSESSEE ALSO RELIED ON THE DECISION OF AMRITSAR BENCH OF TRIBUNAL IN TH E CASE OF TARLOCHAN SINGH & SONS (HUF) VS. ITO [114 TTJ 82]. ABOUT NON-RECORDIN G OF SATISFACTION REFERENCE WAS MADE TO THE ASSESSMENT ORDER. 5. THE LD. CIT(A) WHILE CONSIDERING BUT NOT ACCEP TING THE PLEA OF THE ASSESSEE ON THE VERY FIRST ISSUE RAISED IN THE APPEAL HAD DI SMISS BOTH THE POINTS RAISED IN THE ISSUE AS PER PARA 4.2 TO 5.1 AS UNDER: 4.2 I HAVE GONE THROUGH THE FACTS O F THE CASE AND THE SUBMISSION OF THE APPELLANT. THE CONTENTION OF T HE APPELLANT ON THE PROVISO TO THE SECTION 275(L)(A) CANNOT BE ACCEPTED IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. RAYALA CORPORATION LIMITED VS. UNION OF INDIA & OTHER VIDE [288 ITR 452] WHEREIN IT WAS HE LD THAT IN THE EVENT AN APPEAL IS FILED BEFORE THE ITAT THE LIMITATION OF PERIOD FOR LEVY OF PENALTY WILL BE AS PROVIDED FOR IN SECTION 275(L)(A) IE. 6 MONTHS FROM THE END OF THE MONTH IN WHICH THE APPELLATE ORDER OF THE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISSIONER. IT FURTHER HELD THAT THE PROVISO TO S ECTION 275(1)(A) DOES NOT NULLIFY THE AVAILABILITY TO THE AO OF THE PERIOD OF SIX MONTHS FROM THE END OF THE MONTH WHEN THE ORDER OF THE ITAT IS RECEIVED BY THE ASSESSING OFFICER. THE RELEVANT PARAGRAPH OF THE DECISION OF THE HONORABLE HIGH COURT IS REPRODUCED AS UNDER: SECTION 275(1)(A) OF THE INCOME-TAX ACT 1961 REA DS AS FOLLOWS: 275 . [(1)] NO ORDER IMPOSING A PENALTY UNDER THIS CHAPT ER SHALL BE PASSED. (A) IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTHE R ORDER IS THE SUBJECT- MATTER OF AN APPEAL TO THE COMMISSIONER (APPEALS) U NDER SECTION 246 OR SECTION 246A OR AN APPEAL TO THE APPELLATE TRIBUNAL UNDER SECTION 253 AFTER THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCE EDINGS IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED ARE COMPLETED I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 5 OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH TH E ORDER OF THE COMMISSIONER (APPEALS) OR AS THE CASE MAY BE THE APPELLATE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER WHICHEVER PERIOD EXPIRES LATER : A READING OF THE ABOVESAID PROVISION MAKES IT CLEAR THAT THE INTERPRETATION PLACED BY LEARNED COUNSEL FOR THE PETITIONER ON THE SAID PROVISION IS ACCEPTABLE. THERE IS NO DISPUTE IN THIS CASE THAT T HE PETITIONER HAS FILED AN APPEAL BEFORE THE TRIBUNAL AND THE SAME IS PENDING. IN SUCH A CASE THE LIMITATION PERIOD FOR THE LEVY OF PENALTY WILL BE A S PROVIDED FOR UNDER SECTION 275(1)(A) I.E. SIX MONTHS FROM THE END OF THE MON TH IN WHICH THE ORDER OF THE APPELLATE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISS IONER. THERE CANNOT BE ANY DOUBT ON THIS ASPECT. ACCORDINGLY THIS COURT I S OF THE VIEW THAT THE PROVISO TO SECTION 275(1)(A) OF THE ACT DOES NOT N ULLIFY THE AVAILABILITY TO THE THIRD RESPONDENT OF THE PERIOD OF LIMITATION OF SIX MONTHS FROM THE END OF THE MONTH WHEN THE ORDER OF THE INCOME-TAX APPELLATE TR IBUNAL CHENNAI IS RECEIVED BY THE THIRD RESPONDENT HEREIN. THE ABOVE DECISION OF THE HONORABLE JURISDICTIONAL HIGH COURT IS SQUARELY APPLICABLE TO THE FACT OF THE PRESENT APPEAL. THE D EPARTMENT HAS ALSO ACCEPTED THE ABOVE DECISION OF THE HIGH COURT. THER EFORE THE ISSUE HAS BEEN SETTLED AND HAS REACHED FINALITY. THE ORDER OF THE ITAT WAS PASSED ON 9.1.2009 AND THE AO HAS PASSED THE PENALTY ORDER ON 17.6.2009. IT IS THUS CLEAR THAT THE ORDER WAS PASSED WITHIN 6 MONTHS FRO M THE ORDER OF THE ITAT. HENCE THE CONTENTION OF THE ID.AR IS REJECTED AND THIS GROUND IS DISMISSED. 4.3 BE THAT AS IT MAY THE APPELLANT ITSELF SUBMIT TED A LETTER VIDE 13.4.2009 AND ASKED FOR FURTHER EXTENSION OF TIME TO SUBMIT T HE RELEVANT DETAILS WITH REFERENCE TO THE VERY SAME PENDING PENALTY PROCEEDI NGS. FURTHER THE APPELLANT HAS NOT CONTESTED JURISDICTION AS PER THE PROVISO TO SECTION 275(1)(A) AND ACCEPTED THE VALIDITY OF THE PROCEEDI NGS DURING THE COURSE OF PENALTY PROCEEDINGS BEFORE THE AO. UNDER SUCH CIRCU MSTANCES THE PROVISIONS OF SECTION 292 BB ALSO NEGATES THE CONTE NTION OF THE APPELLANT. IN THE RESULT THIS GROUND IS DISMISSED. 5. THE APPELLANT HAS TAKEN ANOTHER PLEA THAT THE A O HAS NOT RECORDED ANY SATISFACTION FOR INITIATING PENALTY IN THE ASSE SSMENT ORDER. THE APPELLANT HAS RELIED ON THE DECISIONS OF THE DELHI HIGH COURT IN THE CASE OF MADHUSHREE GUPTA V. UOI 225 CTR L. 5.1 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSION OF THE ID. AR. AS PER SUB-SECTION (1) OF SECTION 271 THE ASSES SING OFFICER IS REQUIRED TO BE SATISFIED BEFORE SUCH A PENALTY IS LEVIED. THERE HAS BEEN CONSIDERABLE VARIANCE IN THE JUDICIAL OPINION ON THE ISSUE AS TO WHETHER THE AO IS REQUIRED I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 6 TO RECORD HIS SATISFACTION BEFORE ISSUE OF PENALTY NOTICE UNDER THIS SUB- SECTION. SOME JUDICIAL AUTHORITIES HAVE HELD THAT S UCH A SATISFACTION NEED NOT BE RECORDED. REFERENCE MAY BE MADE TO NAINU MAL HET CHAND V. CIT [2007] 295 ITR 185 (ALL); CIT V. S.V. ANGIDI CHETTIAR [1962] 44 ITR 739 (SC); BECKER GRAY & COMPANY (1930) LTD V.ITO [1978]112 IT R 503(CAL); SHYAM BIRI WORKS PVT. LTD. V. CIT [2002] 259 ITR 625 (ALL). HOWEVER HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. RAM COMMERCI AL ENTERPRISES LTD. (246 ITR 568) HAS HELD THAT SUCH A SATISFACTION MUS T BE RECORDED BY THE AO AND SIMILAR VIEW HAS BEEN TAKEN IN VARIOUS OTHER DE CISIONS I.E. CIT V. RAJAN & CO. [2995] 146 TAXMAN 271(DEL); CIT V. VIKAS PROM OTORS PVT. LTD.[2005]145 TAXMAN 3 OO(DEL): DIWAN ENTERPRISES V. CIT(2000) 246 ITR 571(DEL); CIT V. SUPER METAL RE-ROLLERS (P) LTD [20 04) 135 TAXMAN 407(DEL); NARITA INVESTMENTS P.LTD.[2007] 17 SOT 42 8 (MUM). GIVEN THE CONFLICTING JUDGMENTS ON THE ISSUE AND THE LEGISLAT IVE INTENT SUB-SECTION (LB) HAS BEEN INSERTED IN THIS SECTI ON W ITH RETROSPECTIVE EFFECT FROM 1 ST APRIL 1989 SO AS TO UNAMBIGUOUSLY PROVIDE THAT WHERE ANY AMOUNT I S ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OR LOSS OF AN ASSESSEE IN ANY ORDER OF ASSESSMENT OR REASSESSMENT; AND SUCH ORDER CONTA INS A DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS UNDER CLAUSE (C) OF SUB-SECTION (L) SUCH AN ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE DEEMED TO CONSTITUTE SATISFACTION OF THE ASSESSING OFFICER FOR INITIATION OF PENALTY PROCEEDINGS UNDER THE SAID CLAUSE (C) . IN VIEW OF THE CLEAR PROVISIONS OF THE ACT WHICH DOES NOT REQUIRE ANY EXTERNAL AID FOR ITS INTERPRETATION I AM OF THE CONSIDERED OPINION THAT THE AO HAS VALIDLY INITIATED THE PENALTY PROCE EDINGS. THIS GROUND IS ACCORDINGLY REJECTED. 6. STILL AGGRIEVED THE ASSESSEE HAS COME UP IN AP PEAL AND WHILE REITERATING THE SUBMISSIONS AS MADE BEFORE THE LD. CIT(A) ON BO TH THE POINTS IT WAS FURTHER PLEADED THAT FIRSTLY IN VIEW OF THE PROVISIONS AS C ONTAINED IN PROVISO TO SECTION 275(1)(A) PENALTY COULD ONLY BE IMPOSED BEFORE EXP IRY OF THE FINANCIAL YEAR IN WHICH PROCEEDINGS IN THE COURSE OF WHICH ACTION FO R IMPOSITION OF THE PENALTY HAS BEEN INITIATED ARE COMPLETED OR WITHIN ONE YEAR FR OM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER OF THE LD. CIT(A) IS RECEIVED BY THE CCIT OR CIT WHICHEVER IS LATER AND IN THIS CASE AS PER APPEAL FORM THE CIT (A)S ORDER HAS BEEN RECEIVED ON 12.04.2007 THEREFORE PENALTY COULD BE IMPOSED UP TO 31.03.2009 WHEREAS THE I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 7 SAME HAS BEEN IMPOSED ON 17.06.2009. THEREFORE IT IS BARRED BY TIME LIMITATION. RELIANCE IN THIS REGARD HAS BEEN PLACED BY THE LD. COUNSEL FOR THE ASSESSEE ON AMRITSAR BENCH OF TRIBUNAL IN THE CASE OF TARLOCHAN SINGH & SONS (HUF) VS. ITO [114 TTJ 82] DELHI BENCH DECISION IN THE CASE OF C OSMO FILMS LTD. VS. ACIT IN ITA NO. 2192/DEL/2010 VIDE ORDER DATED 22.07.2011; MOHA IR INVESTMENT AND TRADING COMPANY (P) LTD. IN ITA NO. 4677/DEL/2009 VIDE ORDE R DATED 30.04.2010 AND LUCKNOW BENCH DECISION IN THE CASE OF ITO VS. BLOOS OM FLORICULTURE IN ITA NO.647/LUCK/2008 [134 TTJ 51]. IT WAS FURTHER SUBMI TTED THAT THE LD. CIT(A) IS NOT JUSTIFIED IN REJECTING THE PLEA OF THE ASSESSEE WHI LE FOLLOWING THE HONBLE MADRAS HIGH COURTS DECISION IN THE CASE OF M/S. RAYALA CORPORATION LIMITED VS. UNION OF INDIA & OTHER VIDE [288 ITR 452] IN WHICH WRIT WAS FILED BY THE ASSESSEE TO GET A DECLARATION FOR GETTING LARGER PERIOD OF LIMITATION AND ORDER BY THE HONBLE MADRAS HIGH COURT WAS PASSED ON THE BASIS OF CONCESSION RE CORDED BY THE LD. STANDING COUNSEL FOR THE DEPARTMENT AND SO FAR AS PRECEDENTS ARE CONCERNED THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE CASE OF DCIT VS. K.S. SURESH 319 ITR 1 THE HONBLE MADRAS HIGH COURT HAS SPECIFICAL LY HELD THAT ORDER PASSED ON CONCESSION CANNOT BE A PRECEDENT LAYING DOWN LAW. THEREFORE READING VARIOUS OBSERVATIONS OF THE HONBLE MADRAS HIGH COURTS DEC ISION IN THE SAID CASE IT WAS PLEADED FOR HOLDING THAT PENALTY PROCEEDINGS IN THI S CASE ARE TIME BARRED AND HENCE PENALTY IS LIABLE TO BE QUASHED WHICH MAY BE QUASHED. 7. THE LD. DR WHILE RELYING UPON THE BASIS AND RE ASONINGS AS GIVEN BY THE LD. CIT(A) HAS PLEADED THAT SINCE THE HONBLE MADRAS HI GH COURTS DECISION IS THERE IN FAVOUR OF THE DEPARTMENT IN THE CASE OF M/S. RAYALA CORPORATION LIMITED VS. UNION I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 8 OF INDIA & OTHER (SUPRA) AND IN THIS CASE THERE WAS A FURTHER APPEAL THE ITAT AND ORDER OF PENALTY HAS BEEN PASSED WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE TRIBUNAL ORDER HAS BEEN RECEIVED THEREFO RE PENALTY ORDER PASSED IS WELL WITHIN THE PRESCRIBED TIME AND THE LD. CIT(A) HAS R IGHTLY CONCLUDED TO REJECT THE PLEA OF THE ASSESSEE. THE LD. DR HAS FURTHER RELIED UPON THE DECISION OF ITAT DELHI BENCH IN THE CASE OF ITO V. PANDIT VIJAY KANT SHARM A 2009-TIOL-554-ITAT-DEL TO SUPPORT THE ABOVE PLEA AND SUBMITTED THAT SO FAR AS PLEA OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ORDER OF THE HONBLE MADRAS HIGH COURT HAS BEEN PASSED UNDER CONCESSION THE SAME CANNOT BE ACCEPTED IN AS MUCH AS HONBLE MADRAS HIGH COURT HAS DEALT WITH THE LEGAL ISSUE WITH RESPECT T O THE PROVISIONS AND SO FAR AS INTERPRETATION OF THE STATUTE IS CONCERNED CONCESS ION IF NOT GIVEN WILL NOT AFFECT THE JUDGMENT TO BE VERY BEING A PRECEDENT OF HONBLE JU RISDICTIONAL HIGH COURT WHICH IS NECESSARILY BE FOLLOWED. THEREFORE THE PLEA OF THE ASSESSEE IN THIS REGARD IS LIABLE TO BE DISMISSED AND ORDER OF THE LD. CIT(A) REQUIRES FURTHER CONFIRMATION WHICH MAY BE CONFIRMED. 8. WE HAVE HEARD BOTH THE SIDES CONSIDERED THE MA TERIAL ON RECORD ON THE POINT RELATING TO LIMITATION PROVIDED FOR PASSING P ENALTY ORDER AND FIND THAT THE HONBLE MADRAS HIGH COURT HAS DEALT WITH THIS ISSUE IN THE CASE OF M/S. RAYALA CORPORATION LIMITED VS. UNION OF INDIA & OTHER (SUP RA) AND ALSO FIND THAT IN ORDER TO DECIDE THE WRIT PETITION WHICH HAS BEEN FILED FOR A DECLARATION DECLARING THAT IN THE PETITIONERS CASE WHERE AN APPEAL IS PENDING BEFORE THE ITAT CHENNAI THE PROVISO TO SECTION 275(1)(A) OF THE ACT DOES NOT MOLLIFY T HE AVAILABILITY TO THE THIRD PARTY OF THE PERIOD OF LIMITATION OF SIX MONTHS FROM THE END OF THE MONTH WHEN THE ORDER OF I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 9 THE ITAT CHENNAI IS RECEIVED BY THE DEPARTMENT AND AFTER REPRODUCING THE RELEVANT PROVISIONS OF SECTION 275(1)(A) THE HONB LE MADRAS HIGH COURT HAS HELD AS UNDER: A READING OF THE ABOVESAID PROVISION MAKES IT CLEA R THAT THE INTERPRETATION PLACED BY LEARNED COUNSEL FOR THE P ETITIONER ON THE SAID PROVISION IS ACCEPTABLE. THERE IS NO DISPUTE IN THI S CASE THAT THE PETITIONER HAS FILED AN APPEAL BEFORE THE TRIBUNAL AND THE SAME IS PENDING. IN SUCH A CASE THE LIMITATION PERIOD FOR THE LEVY OF PENALTY WILL BE AS PROVIDED FOR UNDER SECTION 275(1)(A) I.E. SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE APPELLATE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISSIONER. THERE CANNOT BE ANY DOUBT ON THIS ASPECT. ACCORDINGLY TH IS COURT IS OF THE VIEW THAT THE PROVISO TO SECTION 275(1)(A) OF THE ACT DOES N OT NULLIFY THE AVAILABILITY TO THE THIRD RESPONDENT OF THE PERIOD OF LIMITATION OF SIX MONTHS FROM THE END OF THE MONTH WHEN THE ORDER OF THE INCOME-TAX APPELLAT E TRIBUNAL CHENNAI IS RECEIVED BY THE THIRD RESPONDENT HEREIN. 8.1 SINCE THE ISSUE IS SQUARELY COVERED IN FAVOUR O F THE REVENUE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT THE ORDER OF THE LD. CIT(A) WHICH HAS FOLLOWED THE SUCH DECISION CAN BE HELD TO BE VALID AND JUST IFIED TO UPHOLD THE POINT THAT THE PENALTY ORDER IN THIS CASE HAS BEEN PASSED WITHIN T HE PRESCRIBED TIME. SO FAR AS TRIBUNALS DECISIONS AS RELIED UPON BY THE LD. COUN SEL FOR THE ASSESSEE ARE CONCERNED IN VIEW OF THE JURISDICTIONAL HIGH COURT S ORDER THE SAME LOSES THEIR IMPORTANCE SINCE THE HONBLE JURISDICTIONAL HIGH C OURT HAS INTERPRETED THE RELEVANT PROVISO TO SECTION 275(1)(A) TO DECIDE THAT IT WILL NOT APPLY WHERE THE APPEAL HAS BEEN FILED AGAINST THE ORDER OF THE LD. CIT(A) THE REFORE FOLLOWING THE SAID PRECEDENT WE UPHOLD THE ORDER OF THE LD. CIT(A) AN D DISMISS THE POINT RAISED. 9. THE ASSESSEES COUNSEL HAS FURTHER RAISED A POIN T THAT SATISFACTION IS NOT APPROPRIATELY RECORDED AND FROM THE WORDING CONTAIN ED IN THE ASSESSMENT ORDER WHILE INITIATING PENALTY PROCEEDINGS SATISFACTION CANNOT BE DE-SIPHONED FROM SUCH I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 10 LANGUAGE. THEREFORE IT WAS PLEADED THAT THE LD. CI T(A)S ORDER IN THIS REGARD IS NOT PROPER AND THE PLEA OF THE ASSESSEE IN THIS REGARD SHOULD BE ACCEPTED AND THE ASSESSEES COUNSEL HAS ALSO RELIED UPON HONBLE SUP REME COURTS DECISION IN THE CASE OF CIT V. SUN ENGINEERING WORKS P. LTD. 198 IT R 297 FOR THE PREPOSITION THAT CONTEXT IN WHICH THE COURT HAS GIVEN THE DECISION I S MOST RELEVANT AND TO BE CONSIDERED AND IN THIS CASE WRIT FOR CALLING DECLAR ATION WAS FILED AND PENALTY IMPOSED ON THE BASIS OF INVALID SATISFACTION RECORD ED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS SHOULD BE QUASHED . IT WAS ALSO SUBMITTED THAT MAJORITY ADDITION OF AMOUNTS ` . 58.85 CRORES AND ` .33.38 CRORES HAVE ALREADY BE DELETED IN QUANTUM APPEAL AND THE SATISFACTION RECO RDED IS NOT SPECIFIC TO EACH ITEM WHICH WERE CONSIDERED SO IT CANNOT BE SAID T HAT PROPER SATISFACTION IS RECORDED. THEREFORE PENALTY COULD NOT BE IMPOSED. THE LD. CIT(A)S RELIANCE ON SECTION 292BB IS ALSO MISPLACED. 9.1 THE LD. DR WHILE RELYING UPON THE ORDER OF THE LD. CIT(A) ON THIS POINT HAS PLEADED THAT SINCE SATISFACTION ABOUT CONCEALMENT O F INCOME IS PROPERLY RECORDED THEREFORE THE ASSESSEE CANNOT TAKE THE PLEA TO PL EAD THAT THERE IS NO SATISFACTION RECORDED AND THE LD. CIT(A) HAS APPROPRIATELY DEALT WITH THE ISSUE TO REJECT THE PLEA OF THE ASSESSEE WHOSE ACTION IS LEGALLY AND FACTUA LLY CORRECT WHICH MAY BE UPHELD. 9.2 WE HAVE HEARD BOTH THE SIDES CONSIDERED THE MA TERIAL ON RECORD AS WELL AS PRECEDENT RELIED UPON BY BOTH THE SIDES AND FIND TH AT WHILE PASSING THE ASSESSMENT ORDER DATED 28.03.2006 THE ASSESSING OF FICER HAS RECORDED AT THE END OF THE ASSESSMENT ORDER IN LAST PARAGRAPH PEN ALTY PROCEEDINGS UNDER SECTION I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 11 271(1)(C) INITIATED FOR CONCEALING THE PARTICULARS OF INCOME AND OTHERWISE ALSO RELEVANT PROVISION HAS ALSO BEEN AMENDED BY INSERTI NG SUB-SECTION 1B TO SECTION 271 VIDE FINANCE ACT OF 2008 WITH RETROSPECTIVE EFF ECT FROM 01.04.1989 AS UNDER: '(1B) WHERE ANY AMOUNT IS ADDED OR DISALLOWED IN CO MPUTING THE TOTAL INCOME OR LOSS OF AN ASSESSEE IN ANY ORDER OF ASSES SMENT OR REASSESSMENT AND THE SAID ORDER CONTAINS A DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS UNDER CLAUSE (C) OF SUBSECTION (1) SUCH AN ORDER OF ASSE SSMENT OR REASSESSMENT SHALL BE DEEMED TO CONSTITUTE SATISFACTION OF THE A SSESSING OFFICER FOR INITIATION OF THE PENALTY PROCEEDINGS UNDER THE SAI D CLAUSE (C).' 9.3 SINCE SATISFACTION IN THE ASSESSMENT ORDER IS V ERY MUCH THERE FOR INITIATING THE PENALTY PROCEEDINGS THEREFORE WE ARE OF THE C ONSIDERED VIEW THAT THE LD. CIT(A) IS FULLY JUSTIFIED IN REJECTING THE PLEA AS RAISED BY THE ASSESSEE WHOSE ACTION IS CONFIRMED AND THE GROUND RAISED BY THE AS SESSEE IN THIS REGARD IS DISMISSED. 10. AS REGARDS CASE ON MERITS IS CONCERNED THE AS SESSEE IN ITS APPEAL HAS CHALLENGED PENALTY AGAINST TWO OUT OF THREE ITEMS O N WHICH THE PENALTY WAS IMPOSED. AS THE LD. CIT(A) HAS GIVEN RELIEF WITH RE SPECT TO THIRD ITEM AND THE DEPARTMENT HAS CAME UP IN APPEAL IN RELATION TO THA T ITEM OF WHICH THE LD. CIT(A) DIRECTED TO DELETE THE PENALTY. SO THESE ALL THREE ITEMS ARE CONSIDERED TOGETHER. 10.1 THE FIRST ADDITION WAS IN RESPECT OF UNACCOUNT ED LEASE SYNDICATION OF ` .1.66 CRORES. THE ADDITION WAS MADE ON THE BASIS OF IMPOU NDED DOCUMENTS DURING THE COURSE OF SURVEY CONDUCTED UNDER SECTION 133A OF TH E INCOME TAX ACT AT THE PREMISES OF THE ASSESSEE ON 07.02.2005. BUT THE DOC UMENT SHOWED THAT THE ASSESSEE HAD RECEIVED ` .3.97 CRORES WHEREAS IT HAD ACCOUNTED FOR ` .2.31 CRORES ONLY. 10.2 THE SECOND ADDITION WAS ALSO BASED ON IMPOUNDE D DOCUMENT FOUND DURING I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 12 THE SURVEY AND IT PERTAINS TO LEASE RENTAL OF ` .1.20 CRORES WHICH WAS RECEIVED BY THE ASSESSEE FROM WESCARE (INDIA) LTD. TOWARDS LEAS E RENT OF 80 ACRES OF LAND AT VADAKANKULAM WHICH WERE NOT ACCOUNTED IN THE BOOKS OF ACCOUNT. THE OTHER ADDITION WAS FOR AN AMOUNT OF ` . 1.00 CRORE RECEIVED FROM DLWL TOWARDS AMOUNT DUE TO THE ASSESSEE BY ONE M/S. ARUN PIPES LTD. AS REGARDS THE AMOUNT OF ` . 1.66 CRORES BOTH THE LD. CIT(A) AND ITAT SUSTAINED THE ADDITION BY HOLDING THAT THE ASSESSEE HAS NOT BEEN ABLE TO SATISFACTORILY EXPLAI N AS TO WHY IT HAD ACCOUNTED ONLY ` .2.13 CRORES AS AGAINST ` .3.97 CRORES APPEARING AS LEASE SYNDICATION CHARGES IN THE IMPOUNDED DOCUMENT. REGARDING THE AMOUNT OF ` . 1.2 CRORES TOWARDS LEASE RENTAL OF LAND THE LD. CIT(A) HAS STATED THAT THE CONTENT OF THE IMPOUNDED LETTER CLEARLY INDICATED THAT THE SAID AMOUNT WAS TO BE RE CEIVED BY THE ASSESSEE. AS THE AMOUNT WAS RECEIVABLE BY THE ASSESSEE ON ACCOUNT OF REVENUE TRANSACTIONS HE JUSTIFIED THE ADDITIONS MADE BY THE ASSESSING OFFIC ER WHICH WAS BASED ON DOCUMENTARY EVIDENCE. THE ITAT HAS ALSO CONFIRMED T HE ADDITION BY OBSERVING FROM THE AFORESAID LETTER THAT THE ASSESSEE HAD REC EIVED ` .1.2 CRORES AS A SPECIAL CASE WHICH WAS NOT OFFERED FOR TAXATION. REGARDING THE THIRD AMOUNT OF ` .1.2 CRORES THE ITAT FOUND THAT NO CONFIRMATION FROM M/ S. ARUN PIPES LTD. WAS SUBMITTED TO SHOW THAT THE AFORESAID AMOUNT WAS PAI D TO THE ASSESSEE BY DLWL ON ITS BEHALF. IT ALSO STATED THAT THE AMOUNTS WERE NOT PRODUCED TO DEMONSTRATE THAT WHAT DLWL PAID TO THE ASSESSEE WAS NO BEHALF OF M/S . ARUN PIPES LTD. HENCE THE ADDITION WAS CONFIRMED. 10.3 AGAINST IMPOSITION OF PENALTY BY THE ASSESSIN G OFFICER THE ASSESSEE TOOK UP THE MATTER IN APPEAL AND IN ITS WRITTEN SUBMISSIONS IT WAS STATED THAT THE ADDITIONS I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 13 WERE MADE IN THE ASSESSMENT ORDER SOLELY ON THE BAS IS OF THE AFORESAID IMPOUNDED DOCUMENT I.E. HANDWRITTEN NOTE OF THE MANAGING DIRE CTOR OF THE ASSESSEE WHICH HAS NOT BEEN CORROBORATED BY ANY OTHER EVIDENCE SUB STANTIATING THAT TOTAL AMOUNT OF ` .3.97 CRORES WAS ACTUALLY RECEIVED BY THE ASSESSEE TOWARDS THE LEASE SYNDICATION CHARGES. THE ADDITION WAS MADE AND SUBS EQUENTLY SUSTAINED ON THE BASIS OF ADVERSE INFERENCE DRAWN ON THE PRESUMPTION THAT THE ASSESSEE MIGHT HAVE RECEIVED THE SAID AMOUNT IN VIEW OF THE DOCUMENT FO UND AT THE TIME OF SURVEY. THE AVAILABILITY OF HAND WRITTEN NOTE DOES NOT AUTOMATI CALLY PROVE THAT THE AMOUNT STATED THEREIN WAS ACTUALLY RECEIVED BY THE ASSESSE E NOR CAN IT BE STATED THAT THE EXPLANATION HAS NOT BEEN OFFERED BY THE ASSESSEE OR THAT THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT BONAFIDE. SIMILAR ARGUMENT HAS BEEN PUT FORWARD BY THE ASSESSEE IN RESPECT OF THE SECOND ADDITION OF ` .1.2 CRORES TOWARDS LEASE RENTALS ON LAND AT VADAKANKULAM. AS REGARDS THE THIRD ADDITION OF ` .1.2 CRORES RECEIVED FROM DLWL CLAIMED TO BE ON BEHALF OF M/S. ARUN PIPES LT D. THE ASSESSEE HAS STATED THAT THE SAID AMOUNT WAS ADJUSTED IN THE ACCOUNT OF ARUN PIPES LTD. THE CONFIRMATION GIVEN BY THE DLWL MAKES IT CLEAR THAT ` .1.2 CRORES WAS PAID BY THE DLWL FOR AND ON BEHALF OF M/S. ARUN PIPES LTD. SO IT PROVES THAT THE CONTENTION OF THE ASSESSEE IS CORRECT. THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER ON THE ASSUMPTION THAT IT WAS LEASE SYNDICATION CHARGE S. THE ADDITION HAS BEEN SUBSEQUENTLY CONFIRMED IN THE ABSENCE OF CONFIRMATI ON FROM ARUN PIPES LTD. AND THE FAILURE OF THE ASSESSEE TO EXPLAIN THE RELATION SHIP BETWEEN ARUN PIPES LTD. AND DLWL. THE ASSESSEE STATED THAT MERELY BECAUSE THE E XPLANATION IS NOT ACCEPTED IT DOES NOT LEAD TO LEVY OF PENALTY. THE EXPLANATIO N OF THE ASSESSEE CAN AT BEST BE I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 14 SAID TO BE UNTRUE BUT HAS NOT BEEN DISPROVED OR HEL D TO BE FALSE BY THE ASSESSING OFFICER. ONLY IN THE LATTER CASE WHERE THE ASSESSI NG OFFICER IS ABLE TO DISPROVE THE EXPLANATION OF THE ASSESSEE THAT THE PENALTY CAN BE IMPOSED. THE ASSESSEE HAS RELIED UPON FOLLOWING DECISIONS: 1. CIT V. S.V. ANGIDI CHETTIAR 44 ITR 739 (SC) 2. D.M. MANASVI V. CIT[1972] 86 ITR 557(SC) 3. DILIP N. SHROFF VS. JT. CIT: 291 ITR 519 (SC) 4. DIWAN ENTERPRISES V. CIT: 246 ITR 571 (DEL.) 5. CIT V. RAM COMMERCIAL ENTERPRISES LTD.: 246 ITR 568 (DEL) 6. CIT V. SUPER METAL RE- ROLLERS (P) LTD.: 265 IT R 82 (DEL.) 7. CIT V. RAJAN & CO.: 197 CTR 199 (DEL.) 8. CIT V. AUTO LAMPS LTD: 278 ITR 32/ 196 CTR 459 (DEL.) 9. CIT V. B.R. SHARMA: 275 ITR 303 (DEL) 10. CIT V. VIKAS PROMOTERS (P) LIMITED: 194 CTR 38 4 (DEL.) 11. CIT V. MAYAR INDIA LIMITED: 142 TAXMAN 230 (DE L.) 12. CIT V. MUNISH IRON STORE: 263 ITR 484 (P&H) 13. CIT VS. RAMPUR ENGINEERING CO. LTD.: 309 ITR 1 43 (DEL.) (FB) 10.4 THE LD. CIT(A) BEFORE CONCLUDING TO DELETE TH E PENALTY WITH RESPECT TO THIRD ITEM AND CONFIRMING PENALTY IN RELATION TO FIRST TW O ITEMS HAS MADE OBSERVATION IN PARA 6.2 AND DECIDED THE ISSUE AS PER PARA FROM 6.3 TO 6.3.6 WHEREAS TO DELETE THE PENALTY WITH RESPECT TO ITEM NO.3 AS PER PARA 6.4 AND 6.4.1 OF HIS ORDER AND FURTHER REDUCED THE QUANTUM OF PENALTY WITH RESPECT TO ITEM S ON WHICH PENALTY ORDER WAS CONFIRMED TO 125% AGAINST 150% IMPOSED BY THE ASSE SSING OFFICER. 10.5 IN FURTHER APPEAL BEFORE THE TRIBUNAL CHALLEN GING A PORTION OF THE PENALTY WHICH HAS BEEN CONFIRMED BY THE LD. CIT(A) THE LD. COUNSEL FOR THE ASSESSEE WHILE SUPPORTING THE ORDER OF THE DELETION OF PENAL TY WITH RESPECT TO ITEM NO.3 IN RELATION TO ADDITION OF ` .1.2 CRORES HAS PLEADED FOR DELETION OF PENALTY WI TH RESPECT TO ` .1.66 CRORES AND ` .1.20 CRORES WITH RESPECT TO ITEM NO. 1 AND 2. SINC E THE PENALTY PROCEEDINGS ARE INDEPENDENT AND SEPARATE FR OM ASSESSMENT PROCEEDINGS AND PENALTY UNDER SECTION 271(1)(C) OF THE ACT CAN BE IMPOSED ONLY IF CONDITIONS I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 15 WARRANTED UNDER THAT SECTION ARE SATISFIED IN RESPE CT OF WHICH ADDITION OR DISALLOWANCE MADE IN THE ASSESSMENT PROCEEDINGS. ME RELY BECAUSE CERTAIN ADDITIONS ARE MADE IN THE ASSESSMENT ORDER WHICH H AVE BEEN SUSTAINED IN APPEAL DOES NOT MEAN THAT PENALTY AUTOMATICALLY BECOMES LE VIABLE IN RELATION THERETO. ACCORDING TO THE LD. AR IN THE CASE OF THE ASSESSE E THE CONDITIONS WARRANTED FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) VIZ. (I) FAILURE TO OFFER AN EXPLANATION (II) EXPLANATION WAS FOUND TO BE FALSE (III) EXPLA NATION WAS NOT BONAFIDE IN RESPECT OF EACH IMPUGNED ADDITIONS AGGREGATING TO ` .4.06 CRORES WERE NOT SATISFIED AND PENALTY IMPOSED THEREFORE CALLS FOR DELETION IN TO TO. IT WAS FURTHER STATED THAT THE AFORESAID ADDITIONS WERE MADE ON PRESUMPTION BY DRA WING ADVERSE INFERENCE FROM CERTAIN DOCUMENTS FOUND DURING SURVEY AND THERE WAS NO POSITIVE EVIDENCE BROUGHT ON RECORD BY THE ASSESSING OFFICER TO DEMONSTRATE T HE AFORESAID INCOMES WERE IN FACT RECEIVED BY THE ASSESSEE. THE ADDITIONS HAVE BEEN MADE BY REJECTING THE EXPLANATIONS PROVIDED BY THE ASSESSEE. HOWEVER THE EXPLANATIONS OF THE ASSESSEE HAVE NOT BEEN SHOWN TO BE MALAFIDE OR UNSU BSTANTIATED AND HENCE PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN WRONGLY LEVIED BY THE ASSESSING OFFICER AND TO THE EXTENT CONFIRMED BY TH E LD. CIT(A). RELYING UPON VARIOUS DECISIONS AS CITED BEFORE THE LD. CIT(A) AN D REITERATED HERE IT WAS PLEADED THAT PENALTY IS NOT EXIGIBLE IN THIS CASE WHICH WA S WRONGLY IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A). THE ASSESSEES COUNSEL FURTHER SUBMITTED THAT THE LD. CIT(A) HAS FOLLOWED THE HON BLE SUPREME COURTS DECISION IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILES PROCESSORS & OTHERS (306 ITR 277) BUT MUCH WATER HAS FLOWN AFTER THE SAID DECIS ION AND IN THE CASE OF UOI VS. I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 16 RAJASTHAN SPINNING AND WEAVING MILLS LTD. (224 CTR 1) THE HONBLE SUPREME COURT HAS DISCUSSED THE DECISION IN THE CASE OF DHA RMENDRA TEXTILES PROCESSORS & OTHERS (SUPRA) AND HAS CLARIFIED THE SAID DECISION AND MADE CERTAIN IMPORTANT OBSERVATION WHICH ARE VERY RELEVANT AND THE CONDIT IONS STIPULATED IN THE RESPECTIVE PENALTY PROCEEDINGS NEEDS TO BE SATISFIED BEFORE PE NALTY CAN BE IMPOSED AND FURTHER RELIANCE WAS PLACED IN THE CASE OF CIT V. R ELIANCE PETROPRODUCTS LTD. (322 ITR 158)(SC) IT WAS THUS STRONGLY PLEADED FOR DEL ETION OF PENALTY WITH RESPECT TO TWO OUT OF THREE ITEMS. 11. THE LD. DR WHILE RELYING UPN THE ORDER OF THE LD. CIT(A) HAS PLEADED FOR CONFIRMATION OF THE PENALTY WITH RESPECT TO FIRST T WO ITEMS AND FURTHER SUB MITTED THAT VITAL DOCUMENTS WERE FOUND AND CASE WAS REOPENED IN WHICH SPECIFIC ADDITION WITH REGARD TO FIRST TWO ITEMS WERE MADE WHICH ADDITION CAME BE CONFIRMED BY THE LD. CIT(A) AND THEN BY THE TRIBUNAL THEREFORE THE ORD ER OF THE LD. CIT(A) WHICH BASED ON DOCUMENTAL EVIDENCE FOUND TO IMPOSE PENALTY SHOU LD BE UPHELD. 12. AS REGARDS DEPARTMENT APPEAL WITH RESPECT TO TH IRD ITEM OF WHICH THE ASSESSING OFFICER IMPOSED THE PENALTY AND THE LD. C IT(A) DELETED THE SAME THE LD. DR SUBMITTED THAT THE ASSESSEE HAS MISERABLY FAILED TO EITHER PRODUCE ANY DOCUMENT TO SUPPORT ITS PLEA OR SUBSTANTIATE THE E XPLANATION GIVEN TO THE ASSESSING OFFICER AND AS PER EXPLANATION 1 TO SECTI ON 271(1)(C) IF THE ASSESSEE FURNISHES THE EXPLANATION AND HE FAILS TO SUBSTANTI ATE THE SAME PENALTY COULD VALIDLY BE IMPOSED WHICH HAS RIGHTLY BEEN IMPOSED BY THE ASSESSING OFFICER AND THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE SAM E. IT WAS THUS PLEADED FOR SETTING ASIDE THE ORDER OF THE LD. CIT(A) WITH RESPECT TO D ELETION OF PENALTY IN RELATION TO I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 17 ITEM 3 AND RESTORING THAT OF THE ASSESSING OFFICER. 13. THE LD. COUNSEL FOR THE ASSESSEE ON THE APPEA L OF THE DEPARTMENT HAS SUBMITTED THAT FIRSTLY THE ASSESSING OFFICER HAS C OMMITTED A MISTAKE OF ADDING ` .1.2 CRORES TWICE WHEN IT IS ONLY ONE ITEM AND AGAI NST THAT ITEM THE ASSESSEE HAS EXPLAINED THAT THE ASSESSEE HAD TO RECOVER THE AMOU NT OF ` 1.20 CRORES FROM M/S. ARUN PIPES LTD. SO IT ADJUSTED THE SAID AMOUNT FRO M DLWL ON BEHALF OF THE ARUN PIPES LTD. IN THE ACCOUNT OF ARUN PIPES LTD. AND CO NFIRMATION OF DLWL THAT ` .1.20 CRORES WAS PAID BY DLWL WAS FOR AND ON BEHALF OF AR UN PIPES LTD. WITH THE CONTENTION OF THE ASSESSEE THAT THE PAYMENT WAS ADJ USTMENT MADE BETWEEN THE ASSESSEE AND OTHER TWO PERSONS AND MOREOVER M/S. A RUN PIPES LTD. HAD BECOME A DEFUNCT COMPANY SO THE ADDITION OF ` .1.2 CRORES MADE TWICE WAS NOT SUSTAINABLE AT ALL AND FOR SOME REASONS THE ASSESSEE HAS NOT C HALLENGED THE ORDER OF THE ITAT AGAINST QUANTUM APPEAL DECIDED BY THE ITAT IT DOES NOT MEAN THAT THE ASSESSEE HAS ADMITTED HAVING CONCEALED THE AMOUNT OF ` .1.2 CRORES AND THE ASSESSEE CAN ALWAYS RAISE SUCH ISSUE IN PENALTY PROCEEDINGS FOR DELETION OF THE PENALTY WHICH HAS BEEN DEMONSTRATED SHOWING THAT THE AMOUNT RECEI VED TO THE EXTENT OF ` .1.20 CRORES IS ONLY ON ONE AMOUNT AND PENALTY WITH RESPE CT TO ` .1.20 CRORES COULD NOT BE IMPOSABLE AND THE LD. CIT(A) HAS RIGHTLY DELETED TH E SAME WHOSE ORDER SHOULD BE UPHELD. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS GONE THROUGH THE MATERIAL ON RECORD AS PLACED IN THE PAPER BOOKS IN THE LIGHT OF PRECEDENTS RELIED UPON BY RIVAL SIDES.WE HAVE ALSO CAREFULLY GONE THROUGH RELEVANT PORTION OF THE LD. CIT(A)S ORDER IN RELATION TO PENALTY AS CONSIDERED AND ELABORATEL Y DISCUSSED BY HIM AND FIND THAT I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .1757 1757 1757 1757 & & & & 1920/MDS/10 1920/MDS/10 1920/MDS/10 1920/MDS/10 18 ALL THE ITEMS RELATABLE TO PENALTY HAVE BEEN DEALT WITH BY HIM IN DETAILED MANNER GIVING ELABORATE REASONS AND BASIS WHICH HAVE DULY BEEN CONSIDERED BY US CAREFULLY AND IT IS FOUND THAT HE HAS TAKEN A CORRE CT VIEW OF THE MATTER BY DELETING THE PENALTY IN RELATION TO 3 RD ITEM WHILE UPHOLDING THE PENALTY IN RELATION TO I TEM 1 AND 2 TO WHICH WE FULLY AGREE . HOWEVER T HE REASONING AND BASIS AS GIVEN BY THE LD. CIT(A) ARE NOT BEING REPEATED AS WE ARE IN FULL AGREEMENT WITH THE VIEW EXPRESSED/TAKEN BY THE LD. CIT(A) AND HAVE NO OTHER GROUND TO RECORD IN SUPPORT THEREOF OTHER THAN RECORDED BY THE LD. CIT(A) AND T HIS POINT GETS SUPPORT FROM THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T V. K.Y. PILLIAH AND SONS [63 ITR 411]. THEREFORE WHILE CONCURRING WITH THE FINDING AND CO NCLUSION AS DRAWN BY THE LD. CIT(A) IN THIS REGARD AND TAKING SAME BASIS AS ADOPTED BY THE LD. CIT(A) WE UPHOLD HIS ACTION ON MERITS OF THE PENALTY AND C ONFIRM HIS ACTION AND DISMISS BOTH THE APPEALS OF THE REVENUE AS WELL AS ASSESSEE BEING DEVOID OF ANY MERITS. 15. IN THE RESULT BOTH THE APPEALS OF THE REVENUE AND ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON 09.09.2011 SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI DATED THE 09.09.2011 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.