Shri Laxmichand V.Vaghela, Baroda V. The ACIT., Circle-1(2), Baroda

ITA 44/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6568 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 03-05-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 05-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G D BALVA
• Keywords: Gift; Principle of natural justice; Bonafide mistake; Set aside
• Section: 271(1)(c); 143(3); 133A; 143(1); 205; 251; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI T K SHARMA,JM & SHRI A N PAHUJA,AM ITA NO.44/AHD/2009 (ASSESSMENT YEAR:-2002-03) SHRI LAXMICHAND V VAGHELA, C/O HONEST ENTERPRISES LTD., 118, MEGHDOOT APARTMENTS, NEAR APSARA CINEMA, PRATAPNAGAR, BARODA V/S ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(2), BARODA PAN: AALPV 8414 E [APPELLANT] [RESPONDENT] ASSESSEE BY :- SMT. URVASHI SHODHAN, AR REVENUE BY:- SHRI G D BALVA, DR O R D E R A N PAHUJA: THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DATED 06- 11-2008 OF THE LD. CIT(APPEALS)-I, BARODA FOR THE ASSESSMENT YEAR 2002-03, RAISES THE FOLLOWING GROUNDS:- 1 LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN C ONFIRMING THE PENALTY LEVIED OF RS.1,62,000/- BY AO U/S 271(1)(C) OF THE ACT. LD. CIT(A) HAS GROSSLY ERRED IN NOT APPRECIATING THE FACT THAT THE RE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O N THE PART OF THE APPELLANT SO AS TO ATTRACT LEVY OF PENALTY U/S 271( 1)(C) OF THE ACT. LD. CIT(A) OUGHT TO HAVE DELETED THE PENALTY WHICH IS C OMPLETELY UNLAWFUL, HARSH AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE . THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT THE T IME OF OR BEFORE THE HEARING OF THE APPEAL. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.1,14,000/- FILED ON 29-07-2002 BY THE ASSESSEE, WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 [H EREINAFTER REFERRED TO AS THE ACT]. SUBSEQUENTLY, DURING THE COURSE OF A SURVEY U/S 133A OF THE ACT CONDUCTED ON 11-09-200 2 IN THE BUSINESS PREMISES OF M/S HONEST ENTERPRISE LTD., BA NK ACCOUNTS OF THE ASSESSEE AND HIS FAMILY MEMBERS, WITH THE BAROD A PEOPLES CO- ITA NO.44/AHD/2009 2 OP. BANK LTD. REVEALED CASH DEPOSITS ON VARIOUS DAT ES. SINCE SOURCE OF THESE CASH DEPOSITS WAS NOT EXPLAINED IN THE COU RSE OF SURVEY, THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT.SUBS EQUENTLY, THE REASSESSMENT WAS COMPLETED ON 30-12-2005 U/S 143(3) READ WITH SECTION 147 OF THE ACT,DETERMINING INCOME OF RS.5,9 3,508/- AS A RESULT OF THE FOLLOWING ADDITIONS ON ACCOUNT OF : - [I] UNEXPLAINED GIFT FROM ANJANA SOLANIK : RS.1,60,000/- [II] UNEXPLAINED GIFT FROM SANJAY BHAVSAR : RS.1,50,000/- [III] UNEXPLAINED GIFT FROM AMRISH BHAVSAR : RS.1,00,000/- [IV] HOUSE HOLD EXPENSES : RS. 18,500/- [V] UNDISCLOSED PERQUISITES : RS. 34,208/- [VI] UNDISCLOSED RENT FROM SHOP : RS. 16 ,800/- 2.1 INTER ALIA, PENALTY PROCEEDINGS U/S 271(1)(C) ON 30-12-2005 WERE INITIATED. ON APPEAL, THE AFORESAID ADDITIONS WERE UPHELD BY THE LD. CIT(A) VIDE HIS ORDER DATED 6.6.2007 . THER EAFTER, IN RESPONSE TO A SHOWCAUSE NOTICE DATED 11-01-2008 ISS UED BEFORE LEVY OF PENALTY, THE ASSESSEE REPLIED AS UNDER:- (I). 'REGARDING GIFT RECEIVED FROM ANJANA SOLANKI RS.1,60,000/- THE SAME IS REFLECTED IN MY BANK ACCOUNT AND CAPITAL AC COUNT FURNISHED DURING THE ASSESSMENT PROCEEDINGS. SHE HAS GIVEN HER CONFI RMATION FOR THAT. THE GIFT WAS GIVEN OUT OF HER DEPOSIT ACCOUNT WITH OTHE R COMPANY. COPY OF HER DEPOSIT ACCOUNT WITH THAT COMPANY WAS ALSO FURNISHE D. (II). REGARDING GIFT RECEIVED FROM MR. SANJAY BHAVS AR AND MR. AMRISH BHAVSAR ALSO THEIR CONFIRMATIONS ARE FILED. THE SAM E ARE RECEIVED BY CHEQUE AND ARE REFLECTED IN MY BANK ACCOUNT AND CAP ITAL A/C. FURNISHED DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OF FICER HAS NOT ACCEPTED THESE AS GIFT. THOUGH IN FACT I HAVE RECEI VED THE SAME AS DECLARED IN MY CAPITAL A/C. AND BANK A/C. THUS, THERE IS NO CONCEALMENT OF INCOME. ITA NO.44/AHD/2009 3 (III). REGARDING ADDITION ON ACCOUNT OF HOUSE HOLD EXPENSES, ASSESSING OFFICER HAS ESTIMATED HOUSEHOLD EXPENSES IN CASE OF MYSELF AND MY SON JOINTLY AS WE ARE STAYING TOGETHER. ASSESSING OFFIC ER HAS ADDED 50% OF ESTIMATED EXPENSES TO MY INCOME. HERE THE ADDITION TO INCOME IS ON ACCOUNT OF ASSESSING OFFICER'S ESTIMATE OF EXPENSES ON HIRE SIDE. IT IS NOT DUE TO CONCEALMENT OF PARTICULARS. THUS, THERE IS N O CONCEALMENT OF INCOME AS ALL THE PARTICULARS WERE FURNISHED DURING ASSESSMENT. (IV). REGADING RENT RECEIVED RS.24,000/- DURING THE YEAR FOR SHOP, THE SAME WAS INADVERTENTLY OMITTED FROM ADDING TO MY TO TAL INCOME. THE SAME WAS REFLECTED IN MY CAPITAL A/C. WHICH WAS FURNISHE D DURING THE ASSESSMENT PROCEEDINGS. THUS, PARTICULARS RELATING TO THE SAME WERE FURNISHED. THUS THERE IS NO CONCEALMENT OF INCOME. THUS, THERE IS NO CONCEALMENT AS CONTEMPLATED IN SE CTION 271 (1)(C). THEREFORE, I REQUEST YOUR GOODSELVES TO DROP THE PR OCEEDINGS U/S. 271(1)(C). 2.2 HOWEVER, THE AO DID NOT ACCEPT THE EXPLANAT ION OF THE ASSESSEE AND LEVIED A PENALTY OF RS.1,62,000/- @10 0% OF THE TAX SOUGHT TO BE EVADED ON THE INCOME OF RS.4,62,538/- ON THE GROUND THAT THE EXPLANATION OF THE ASSESSEE WAS NOT BONAFI DE. INTER ALIA, THE AO INVOKED EXPLANATION 1 TO SEC. 271(1)(C) OF THE A CT AND RELIED UPON DECISIONS IN CIT VS MUSSADILAL RAMBHAROSE 165 ITR 14,20 (SC), CIT VS K.R. SADYAPPAN 185 ITR 49 (SC),) CIT(ADDL) VS JEEVA N LAL SHAH 205 ITR 244 (SC) AND K.P. MADHUSUDANAN VS 251 ITR 99 (SC). 3. ON APPEAL, THE LEARNED CIT(A) UPHELD THE LEV Y OF PENALTY IN THE FOLLOWING TERMS:- 4. IN APPEAL, THE LD AR REITERATED THE ARGUMENTS T AKEN AT THE ASSESSMENT STAGE. HOWEVER NO EVIDENCE COULD BE ADDU CED TO ESTABLISH THE IDENTITY OF THE DONORS OF THE GIFTS. THE MOTIVE S IN THE MAKING OF THE GIFTS WERE ALSO NOT ESTABLISHED. ACCORDINGLY, IT IS HELD THAT THE AO HAS CORRECTLY CONSIDERED THESE AMOUNTS TO BE THE INCOME OF THE AS SESSEE FROM UNACCOUNTED SOURCES. THE LEVY OF PENALTY ON THIS AM OUNT IS CONFIRMED. SIMILARLY, THE ADDITION ON ACCOUNT OF HOUSEHOLD EXP ENSES AND PERQUISITE SEEMS TO BE REASONABLE, CONSIDERING THE FACT THAT T HE ASSESSEE HAD SHOWN WITHDRAWAL OF ONLY RS.36,000/- DURING THE YEAR. HEN CE THE ACTION OF THE AO IS CONFIRMED IN THIS REGARD ALSO. RECEIPT OF RENT O F RS.16,800/- WAS ADMITTEDLY NOT RECORDED IN THE BOOKS. ACCORDINGLY, THE AO RIGHTLY MADE THE ADDITION OF THE SAME TO THE TOTAL INCOME. THE PENAL TY IN THIS RESPECT IS ALSO CONFIRMED. ITA NO.44/AHD/2009 4 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD CIT(A). THE LEARNED AR ON BEHALF OF THE ASSESSEE WHILE REFERRING TO A DECISION DATED 13-01-2011 OF T HE ITAT IN QUANTUM APPEAL IN ITA NO. 3447/AHD/2007 IN THE ASSE SSEES OWN CASE FOR THE YEAR UNDER CONSIDERATION, CONTENDED TH AT ADDITIONS ON ACCOUNT OF GIFTS HAVING BEEN RESTORED TO THE FILE O F THE AO, NO PENALTY IS LEVIABLE. AS REGARDS ADDITION TOWARDS HO USEHOLD EXPENSES SHE SUBMITTED THAT THE SAID ADDITION WAS ESTIMATE D WHILE RENTAL INCOME NOT SHOWN IN THE RETURN BUT REFLECTED IN TH E CAPITAL ACCOUNT WAS A BONAFIDE MISTAKE AND IN THESE CIRCUMSTANCES , THE AO WAS NOT JUSTIFIED IN LEVYING THE PENALTY .THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE FINDINGS OF THE LD. CIT(A) IN THE IMP UGNED ORDER. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS REGARDS PENALTY LEVIED IN RESPECT OF THREE UNEXPLAINED GIFTS OF RS.4,10,000/-, WE FIND THAT IN QUANTUM AP PEAL IN ITA NO. 3447/AHD/2007, THE TRIBUNAL IN THEIR ORDER DATED 13 -01-2011 SET ASIDE THE ISSUES TO THE FILE OF THE AO IN THE FOLLOWING T ERMS:- 9 WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. IN RESPECT OF ANJANA SOLANKI THE FACT THAT MONEY WAS WITHDRAWN FROM BARODA PEOPLES CO-OP. BANK LTD. FROM THE ACCOU NT OF VAGHELA METALS (P) LTD. AND CREDITED INTO THE ACCOUNT OF TH E ASSESSEE HAS NOT BEEN VERIFIED AND HAS BEEN RATHER IGNORED, SECONDLY, OTH ER TWO DONORS HAVE NOT BEEN QUESTIONED AS TO FROM WHERE THEY HAVE BROUGHT THE CASH BEFORE THE ISSUE OF CHEQUES. FURTHER, WE ARE OF THE VIEW THAT NO CONCLUSION CAN BE DRAWN WITHOUT CROSS-EXAMINING THE DONORS AS TO THE SOURCE OF CASH DEPOSITED BY THEM. THE ISSUE REGARDING OCCASION AND CIRCUMSTANCES CAN BEST BE EXPLAINED BY THE DONORS AS TO WHAT PROMPTED THEM TO GIVE THE GIF TS. WE ACCORDINGLY RESTORE THE MATTER TO THE AO. BEFORE HIM THE ASSESS EE WILL PRODUCE THE DONORS FOR EXAMINATION BY THE AO AT AOS OWN CONVEN IENT DATE. LET THE AO EXAMINE THE CREDITWORTHINESS OF THE DONORS, SOUR CE OF DEPOSIT OF CASH, CIRCUMSTANCES UNDER WHICH GIFTS WERE MADE, THE STRE NGTH OF RELATIONSHIP BETWEEN THE DONORS AND THE ASSESSEE WHICH PROMOTED THEM TO GIVE GIFTS, FINANCIAL STATUS OF THE DONORS, SO AS TO SUPPORT TH E CLAIM OF GENUINENESS, PRE AND POST GIFT RELATIONSHIP BETWEEN THE DONORS A ND THE DONEE ETC. THE ITA NO.44/AHD/2009 5 AO WILL BE CONSIDER ALL THESE ASPECTS BEFORE COMING TO THE CONCLUSION WHETHER GIFTS ARE GENUINE OR NOT. THIS GROUND OF AS SESSEE IS ALLOWED BUT FOR STATISTICAL PURPOSES. 5.1 HONBLE SUPREME COURT IN THE CASE OF K. C.BUILDERS VS. ACIT,265 ITR 562(SC) HELD THAT ORDINARILY, PENALTY CANNOT STAND IF THE ASSESSMENT ITSELF IS SET ASIDE. WHERE AN ORDER OF ASSESSMENT OR REASSESSMENT ON THE BASIS OF WHICH PENALTY HAS BEEN LEVIED ON THE ASSESSEE, HAS ITSELF BEEN FINALLY SET ASIDE OR CANC ELLED BY THE TRIBUNAL OR OTHERWISE, THE PENALTY CANNOT STAND BY ITSELF AND THE SAME IS LIABLE TO BE CANCELLED. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. R.DALMIA,(1992)107 TAXATION 107, HELD TH AT NO PENALTY SURVIVES AFTER DELETION OF ADDITIONS, FORMING THE B ASIS FOR THE LEVY OF PENALTY. SIMILAR VIEW WAS TAKEN IN ADDL. COMMISSIO NER OF INCOME- TAX V. BADRI KASHI PRASAD (1993] 200 ITR 206 (ALL) AND PRABHAT OIL TRADERS V. INCOME-TAX OFFICER (NO. 3) (1996) 218 IT R (A.T.) 39 (ITAT, AHMEDABAD),CITY DRY FISH COMPANY V. COMMISSI ONER OF INCOME-TAX (1999) 238 ITR 63 (A.P.) , CIT VS. MOHD. BUX SOKAT ALI (2004) 265 ITR 326 (RAJ)AND ACIT VS. VIP INDUSTRIES (2009) 122 TTJ 289 (MUM). 5.2 SINCE THE VERY BASIS UPON WHICH THE PENALTY HAS BEEN IMPOSED IN RELATION TO THE AMOUNT OF GIFTS OF RS. 4,10,000/ -, DOES NOT EXIST IN VIEW OF THE AFORESAID ORDER DATED 13-01-2011 OF TH E ITAT IN QUANTUM APPEAL IN ITA NO. 3447/AHD/2007, WE ARE OF THE OPINION THAT PENALTY LEVIED IN RELATION TO THE ADDITIONS UP HELD BY THE LD. CIT(A) DOES NOT SURVIVE AND THE IMPUGNED ORDER I S , THEREFORE, SET ASIDE TO THAT EXTENT. HOWEVER, THE AO IS FREE TO IN ITIATE THE PENALTY PROCEEDINGS IN ACCORDANCE WITH LAW WHILE COMPLETING THE ASSESSMENT IN PURSUANCE TO THE AFORESAID DIRECTIONS OF THE ITAT IN QUANTUM APPEAL. 5.3 AS REGARDS PENALTY LEVIED IN RESPECT OF ADDIT ION ON ACCOUNT OF HOUSEHOLD EXPENSES OF RS.18,500/-,PERQUISITES OF RS .34,208/- AND ITA NO.44/AHD/2009 6 RENTAL INCOME OF RS.16,800/-, WE FIND THAT THE AO I MPOSED THE PENALTY ,INVOKING, INTER ALIA, EXPLANATION 1 TO THE SEC. 271(1)(C) OF THE ACT AND RELIED UPON A NUMBER OF DECISIONS WHILE HOLDING THAT EXPLANATION OF THE ASSESSE WAS NOT BONAFIDE. THE LD . CIT(A) WITHOUT RECORDING ANY FINDINGS ON THE CONCLUSION OF THE AO IN INVOKING THE EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT AND WI THOUT EVEN EXAMINING AS TO WHETHER OR NOT THE DECISIONS OF T HE HONBLE SUPREME COURT RELIED UPON BY THE AO WERE APPLICABL E IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND WHETHER OR NOT E XPLANATION OF THE ASSESSEE WAS BONAFIDE, UPHELD THE LEVY OF PENAL TY. IT IS WELL SETTLED THAT ASSESSMENT PROCEEDINGS AND PENALTY PRO CEEDINGS ARE SEPARATE AND DISTINCT AND AS HELD BY HON'BLE SUPREM E COURT IN THE CASE OF ANANTHRAMAN VEERASINGHAIAH & CO. VS. CIT, 1 23 ITR 457, THE FINDINGS IN THE ASSESSMENT PROCEEDINGS CANNOT B E REGARDED AS CONCLUSIVE FOR THE PURPOSES OF THE PENALTY PROCEEDI NGS. IT IS ALSO WELL SETTLED THAT THE CRITERION AND YARDSTICKS FOR THE PURPOSE OF IMPOSING PENALTY U/S 271(1)(C) OF THE ACT ARE DIFF ERENT THAN THOSE APPLIED FOR MAKING OR CONFIRMING THE ADDITIONS. IT IS, THEREFORE, NECESSARY TO REAPPRECIATE AND RECONSIDER THE MATTER SO AS TO FIND OUT AS TO WHETHER THE ADDITION MADE IN THE QUANTUM PROCEEDINGS ACTUALLY REPRESENTS THE CONCEALMENT ON THE PART OF THE ASSESSEE AS ENVISAGED IN SEC. 271(1 )(C) OF THE ACT AND WHETHER IT IS A FIT CASE TO IMPOSE THE PENALTY BY INVOKING THE SAID PROVISIONS. THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT STIPULATE THAT IF THE ASSESSING OFFICER OR THE CIT(APPEALS) OR THE COMMISSIONER, IN THE COU RSE OF PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY P ERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS THEREOF , HE MAY DIRECT THAT SUCH PERS ON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED BY A REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INC OME. EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT MENTIONS THAT WHE RE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY ITA NO.44/AHD/2009 7 PERSON UNDER THE ACT, SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE AO OR T HE CIT (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR SUCH PERSON OFF ERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE A ND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOT AL INCOME HAVE BEEN DISCLOSED BY HIM, THEN THE AMOUNT ADDED OR DIS ALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESU LT THEREOF SHALL FOR THE PURPOSE OF CLAUSE (C) OF SECTION 271(1), B E DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. IN OTHER WORDS, THE NECESSARY INGREDIEN TS FOR ATTRACTING EXPLANATION 1 TO SECTION 271(1)(C) ARE THAT (I) THE PERSON FAILS TO OFFER THE EXPLANATION, OR (II) HE OFFERS THE EXPLANATION WHICH IS FOUND BY TH E AO OR THE CIT (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (III) THE PERSON OFFERS EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTSRELATING TO THE SAME HAVE BEE N DISCLOSED BY HIM. 5.3 IF THE CASE OF ANY ASSESSEE FALLS IN ANY OF THESE THREE CATEGORIES, THEN THE DEEMING PROVISION PROVIDED IN EXPLANATION 1 TO SECTION 271(1)(C) COMES INTO PLAY, AND THE AMOUNT A DDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME SHALL BE C ONSIDERED AS THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED, FOR THE PURPOSES OF CLAUSE (C) OF SECTION 271(1), AND THE P ENALTY FOLLOWS. ON THE OTHER HAND, IF THE ASSESSEE IS ABLE TO OFFER A N EXPLANATION, WHICH IS NOT FOUND BY THE AUTHORITIES TO BE FALSE, AND ASSESSEE HAS BEEN ABLE TO PROVE THAT SUCH EXPLANATION IS BONA FI DE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY H IM, THE ASSESSEE SHALL BE OUT OF THE CLUTCHES OF EXPLANATION 1 TO SE CTION 271(1)(C) OF THE ACT, AND IN THAT CASE, THE PENALTY SHALL NOT BE IMPOSED. AS IS APPARENT FROM THE IMPUGNED ORDER IN THE INSTANT C ASE, THE LD. CIT(A) WHILE UPHOLDING LEVY OF PENALTY DID NOT ANA LYSE THE ISSUES ITA NO.44/AHD/2009 8 RAISED BY THE ASSESSEE IN THEIR EXPLANATION NOR EXA MINED AS TO WHETHER OR NOT THE EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT INVOKED BY THE AO WAS APPLICABLE IN THIS CASE NOR EVEN BROU GHT OUT AS TO HOW THE PENALTY IS LEVIABLE FOR CONCEALMENT OF PAR TICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND WHICH SPECIFIC PARTICULARS WERE CONCEALED OR FURNISHED INACCURATE. MOREOVER, THE LD. CIT(A) DID NOT HAVE BENEFIT OF FINDINGS OF THE ITAT IN THE QUANTUM APPEAL. A MERE GLANCE AT THE IMPUGNED ORDER REVEALS THAT THE ORDER PASSED BY THE LD. CIT(A) IS CRYPTIC AND GROSSLY VI OLATIVE OF ONE OF THE FACETS OF THE RULES OF NATURAL JUSTICE, NAMELY, THAT EVERY JUDICIAL/QUASI-JUDICIAL BODY/AUTHORITY MUST PASS RE ASONED ORDER, WHICH SHOULD REFLECT APPLICATION OF MIND BY THE CON CERNED AUTHORITY TO THE ISSUES/POINTS RAISED BEFORE IT. THE APPLICAT ION OF MIND TO THE MATERIAL FACTS AND THE ARGUMENTS SHOULD MANIFEST IT SELF IN THE ORDER. SECTION 250(6) OF THE INCOME TAX ACT ,1961 MANDATES THAT THE ORDER OF THE CIT(A) WHILE DISPOSING OF THE APPEAL SHALL B E IN WRITING AND SHALL STATE THE POINTS FOR DETERMINATION, THE DECIS ION THEREON AND THE REASON FOR THE DECISION. THE REQUIREMENT OF RECORD ING OF REASONS AND COMMUNICATION THEREOF HAS BEEN READ AS AN INTEG RAL PART OF THE CONCEPT OF FAIR PROCEDURE. THE REQUIREMENT OF RECOR DING OF REASONS BY THE QUASI-JUDICIAL AUTHORITIES IS AN IMPORTANT S AFEGUARD TO ENSURE OBSERVANCE OF THE RULE OF LAW. IT INTRODUCES CLARIT Y, CHECKS THE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERAT IONS AND MINIMIZES ARBITRARINESS IN THE DECISION-MAKING PROC ESS. WE MAY REITERATE THAT A DECISION DOES NOT MERELY MEAN TH E CONCLUSION. IT EMBRACES WITHIN ITS FOLD THE REASONS FORMING BASIS FOR THE CONCLUSION. [MUKHTIAR SINGH VS. STATE OF PUNJAB,(19 95)1SCC 760(SC)]. AS IS APPARENT, THE IMPUGNED ORDER SUFFE RS FROM LACK OF REASONING AND IS NOT A SPEAKING ORDER. IN VIEW OF THE FOREGOING, ESPECIALLY WHEN THE LD. CIT(A) HAS NOT PASSED A SPE AKING ORDER ON THE ISSUES RAISED IN THIS APPEAL, WE CONSIDER IT F AIR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTOR E THE MATTER TO HIS FILE FOR DECIDING THE VARIOUS ISSUES IN RELATION T O LEVY OF PENALTY ON ITA NO.44/AHD/2009 9 THE ADDITIONS ON ACCOUNT OF HOUSEHOLD EXPENSES OF RS.18,500/- ,PERQUISITES OF RS.34,208/- AND RENTAL INCOME OF RS .16,800/- AFRESH IN ACCORDANCE WITH LAW, AFTER ALLOWING SUFFICIENT O PPORTUNITY TO BOTH THE PARTIES. NEEDLESS TO SAY THAT WHILE REDECIDING THE APPEAL, THE LEARNED CIT(A) SHALL PASS A SPEAKING ORDER, KEEPING IN MIND, INTER ALIA, THE MANDATE OF PROVISIONS OF SEC. 250(6) OF T HE ACT AND VARIOUS JUDICIAL PRONOUNCEMENTS ON THE ISSUE. WITH THESE OB SERVATIONS, GROUND NO. 1 IN THE APPEAL IS DISPOSED OF. 6. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND IN THE APPEAL, ACCORDINGLY, THIS G ROUND IS DISMISSED. 7. IN THE RESULT, APPEAL IS ALLOWED BUT PARTLY FO R STATISTICAL PURPOSES ORDER PRONOUNCED IN THE COURT TODAY ON 20 -05-2011 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 20 -05-2011 COPY OF THE ORDER FORWARDED TO: 1. SHRI LAXMICHAND V VAGHELA, C/O HONEST ENTERPRISE S LTD., 118, MEGHDOOT APARTMENTS, NEAR APSARA CINEMA, PRATAPNAGAR, BARODA 2. THE ACIT, CIRCLE-1(2), BARODA 3. CIT CONCERNED 4. CIT(A)-I, BARODA 5. DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD