ANTIQUARIAT DESHERA KOTHI vs. A C I T CENTRAL CIRCLE-2 I T DEPT JAIPUR

Judgment 26/07/2017

By way of this appeal, the appellant has challenged the judgment and order passed by the tribunal whereby the tribunal has dismissed the appeal and confirmed the order passed by the AO as well as the CIT(A). This court while admitting the appeals on 03.11.2006 and 7.10.2016 has framed the following substantial question of law:- “Whether there can be a levy of penalty u/s 271(1) (c) of the Income Tax Act, 1961 merely on the basis of an presumptive and estimated addition made in quantum proceedings?” held as under:- 4.The question of law, i.e. 'Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law in holding that since no return of income had been filed by the assessee, no penalty could be levied under Section 271(1)(c) of the Income Tax, 1961 for concealment of income', is answered against the revenue for the following reasons, which has been elaborately discussed and the relevant Paragraph 8 reads as under :-

evaded by the reason of concealment of particulars of income as discussed above. The amount payable by the assessee as a result of this order is calculated as per Annexure-A to this order attached. Issue D.N. & Challan. 5.The Appellate Authority, i.e. CIT (A) in Paragraph 5 while considering the provisions of Section 271(1)(c) gave the following reasons and relevant paragraph reads as under :- “The concept of deemed concealment was introduced in the I.T. Act with effect from 01.10.1984. In this case the deemed concealment if any would be on the date of search i.e. 31.8. 84. As this date is prior to 1.10.84, the concept of deemed concealment under explanation 5 of section 271(1)(c) would not be applicable to the appellant. Further explanation 4 is not applicable to the appellant because explanation 3 itself is not applicable.

Therefore neither the main section nor the explanation to sections are applicable to the facts of the case. Moreover the entire assessment i.e. the estimation of total income and the estimation of the stocks on the date of search is based on certain assumptions. In fact both the additions are on estimated basis. It is an accepted fact that whenever an addition is made on the basis of estimates, the penalty for concealment is not leviable. Moreover the decision relied upon by the assessing officer was in respect of the purchase of property and not stocks and therefore ratio laid down in that case is not applicable to the facts of the appellant's case. For all these reasons

therefore in my opinion, there is no reason to levy a penalty u/s 271(1)(c) of the I.T. Act.” 6.The penalties were upheld as it was only estimated value on which estimates of income tax was made and the books of accounts were rejected. There was no scope to levy the penalty under Section 271(1)(c), the appellant had been assessed by the Income Tax. The Tribunal has very rightly considered that both the additions are on a estimated basis. Therefore, just cause estimates are made, penalty cannot be levied under Section 271(c).” Counsel for the appellant contended that the penalty which is imposed on estimation.

(4 of 4) [ITA-141/2015]

However, counsel for the respondent has relied upon the decision of this Court in the case of CIT Jaipur Vs. M/s Antiquariat (D.B. Income Tax Appeal No.617/2009) and other connected matters decided on 26.04.2017 wherein the matter was remitted back to the A.O. Mr. Mathur contended that the matter was remitted back to the first authority, in that view of the matter, the order of penalty is quashed. However, we made it clear that ultimately after remand, if the order is passed against the assessee, it will be open for the authority to take legal course in accordance with law to initiate fresh proceedings. Cancellation of this penalty will not influenced the first authority or any other authority, not to initiate further proceedings, if it is permissible. The appeals stand disposed of accordingly. However, it will also be open for the assessee to resist the proceedings, if at all in accordance with law. (INDERJEET SINGH)J. (K.S.JHAVERI)J. Jyoti Item No.140-141