M/s. Shilp Gravures, Ahmedabad V. The ACIT., Circle-6, Ahmedabad

ITA 680/AHD/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9226 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-12-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 03-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHALINI VERMADR
• Assessee Lawyers: S N DIVATIA
• Keywords: Business income; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI T K SHARMA,JM & SHRI A N PAHUJA,AM ITA NO.680/AHD/2009 (ASSESSMENT YEAR:-2003-04) M/S SHILP GRAVURES, 67-68, MAHALAXMI INDUSTRIAL ESTATE, NEAR BOMBAY CONDUCTORS, VATVA, AHMEDABAD V/S ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-6, AHMEDABAD PAN: AAKFS 5782 M [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI S N DIVATIA, AR REVENUE BY:- SMT. SHALINI VERMA,DR O R D E R A N PAHUJA: THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DAT ED 10-12-2008 OF THE LD. CIT(APPEALS)-XI, AHMEDABAD, R AISES THE FOLLOWING GROUNDS:- 1. THE ORDER PASSED U/S 250 ON 10-12-2008 FOR AY 2003- 04 BY CIT(A)-XI, A;BAD BY UPHOLDING PENALTY OF RS.1,37,84 7/- U/S 271(1)(C) OF THE ACT IMPOSED BY AO IS WHOLLY ILLEGA L UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2. THE LD. CIT(A) HAS GRIEVOUSLY FAILED TO APPRECIA TE THAT THE DISALLOWANCE OF SPECIAL DISCOUNT EXPENSES WAS MADE BY AO TO THE EXTENT OF RS.15,000/-WHICH WAS ENHANCED BY RS.3,60, 095/- BY CIT(A) DURING QUANTUM APPEAL AND HENCE THE PENALTY IMPOSED BY AO ON THE TOTAL DISALLOWANCE OF RS.3,75,095/- IS BA D IN LAW AND ILLEGAL. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN UPHOLDIN G THAT THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF INCOME IN R ESPECT OF SPECIAL DISCOUNT. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) OUGHT NOT TO HAVE UPHELD THE PENALTY U/S 271(1)(C) OF THE ACT IN RESPECT OF THE DISALLOWANCE OF SPECIAL DISCOUNT EXP . 2.3 THE LD. CIT(A) HAS ERRED IN CONFIRMING THE PENA LTY BY MECHANICALLY RELAYING ON THE APPELLATE ORDER IN QUANTUM APPEAL. ITA N O.680/AHD/09 2 IT IS THEREFORE PRAYED THAT THE PENALTY OF RS.1,37, 847/- UPHELD BY CIT(A) MAY PLEASE BE QUASHED . 2 FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.41,77,520/- FILED ON 29-11-2003 BY THE ASSESSEE, MANUFACTURING ENGRAUVED COPPER ROLLERS, AFTER BEING PROCESSED ON 29.11.2003 U/S 143(1) OF THE INCOME-TAX ACT, 1961 [ HEREINAFTER REFERRED TO AS THE ACT],WAS TAKEN UP FOR SCRUTINY WITH THE ISSUE OF A NOTICE U/S 143(2) OF THE ACT ON 19.11.2004.DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASSESSEE DEBITED SPECIAL DISCOUNT EXPENSE S OF RS. 3,75,095/- IN THE YEAR UNDER CONSIDERATION. THE EXP ENSES OF THIS NATURE WERE NEVER CLAIMED IN THE EARLIER YEARS. TO A QUERY BY THE AO, THE ASSESSEE MERELY FURNISHED A COPY OF JOURNA L VOUCHER, DISCLOSING NAMES OF FIVE PARTIES. SINCE THE ASSESSE E DID NOT ADDUCE ANY REASONS OR PURPOSE OF THE SAID EXPENDITURE, THE AO DISALLOWED AN ADHOC AMOUNT OF RS. 15,000/- OUT OF THE AFORESA ID EXPENSES. ACCORDINGLY, INCOME WAS ASSESSED AT RS.42,52,520/- VIDE ORDER DATED 28.2.2006,DISALLOWANCES OF RS. 40,000/- OUT O F MANUFACTURING EXPENSES AND RS. 20,000/- OUT OF EXPENSES DEBITED I N P/L A/C HAVING ALSO BEEN MADE. THE AO DID NOT RECORD EITHER ANY SA TISFACTION NOR INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 3. ON APPEAL AGAINST THE ASSESSMENT ORDER, THE LD. CIT(A) ENHANCED THE DISALLOWANCE TO RS. 3,75,095/- IN HIS ORDER DATED 12.1.2007 IN THE FOLLOWING TERMS: '2.3. I HAVE CONSIDERED THE FACTS OF THE CASE, SUBM ISSION MADE BY THE ID. COUNSEL FOR THE APPELLANT AND CASE LAWS RELIED UPON BY THE ID. COUNSEL FOR THE APPELLANT. IN THIS CASE, IF IS THE ADMITTED FAC T BY THE APPELLANT THAT THE SPECIAL DISCOUNT EXPENSES TO THE TUNE OF RS.3,75,09 5/- HAVE BEEN CLAIMED FOR THE FIRST TIME. AS PER EXPLANATION OFFERED BY T HE APPELLANT, THE SPECIAL DISCOUNT CLAIMED TO HAVE BEEN GIVEN TO THE FIVE PAR TIES IS NOT BASED ON ANY SPECIFIC SCHEME OR POLICY AND NOR ANY SPECIFIC BAS IS HAS BEEN EXPLAINED BY THE APPELLANT WHILE CLAIMING THE SAME- THE APPEL LANT HAS MAINLY FOCUSED ITS EXPLANATION TO JUSTIFY THE CLAIM OF EXP ENSES STATING THAT THERE IS ITA N O.680/AHD/09 3 COMPETITIVE MARKET AND THE SPECIAL DISCOUNT HAS BEE N ALLOWED TO DEVELOP THE BUSINESS RELATION WITH THE CUSTOMERS AND THAT T HE BUSINESS OF THE APPELLANT HAS INCREASED WITH INCREASE IN SALE. ON B OTH COUNTS, THE EXPLANATION OFFERED BY THE APPELLANT IS NOT ACCEPTA BLE AT ALL, BECAUSE, SINCE THERE IS NO WRITTEN AGREEMENT WITH THE PARTI ES TO WHOM THE SPECIAL DISCOUNT HAS BEEN ALLOWED AND ALSO SINCE THERE IS N O SPECIFIC WRITTEN SCHEME OR POLICY TO SUPPORT THE CLAIM OF THE APPELL ANT, THE CONTENTION OF THE APPELLANT IS NOT TENABLE. AS REGARDS INCREASE I N SALES IT MAY BE POSSIBLE DURING ROUTINE BUSINESS AND ALSO TO SOME E XTENT ON ACCOUNT OF INCREASE IN VALUE OF GOODS ALSO. DURING THE COURSE OF BUSINESS, EVEN IF THERE IS SOME INCREASE IN SALE THAT HAS NOT BEEN PR OVED TO BE ON ACCOUNT OF SPECIAL DISCOUNT ALLOWED WITHOUT ANY ADVERTISEME NT OF ANY SUCH SCHEME AND EXPENDITURE CLAIMED ONLY ON 31-03-2003 I.E. THE LAST DAY OF THE YEAR. FROM THE COPY OF GENERAL LEDGER OF THE PARTIES TO W HOM THE DISCOUNT HAVE BEEN GIVEN, IT IS VERY CLEAR THAT THE SPECIAL DISC OUNT HAS BEEN ACCOUNTED ONLY ON 31ST MARCH, 2003. THE SPECIFIC DETAILS AND BASIS FOR CALCULATING SUCH DISCOUNT IS NOT AVAILABLE ON RECORD AND ALSO I T COULD NOT BE EXPLAINED AT ALL BY THE APPELLANT DURING THE COURSE OF APPELL ATE PROCEEDINGS. IT IS ALSO CLEAR THAT NO WITHDRAWALS OF SUCH AMOUNT HAVE BEEN MADE BY THE PARTIES TO WHOM THE SPECIAL DISCOUNT HAS BEEN GIVEN DURING THE YEAR. THERE IS ALSO NO ENTRY TO SUPPORT THAT ANY ADVANCES, ETC. WAS GI VEN TO THE PARTIES TOWARDS SPECIAL DISCOUNT SCHEME. THE LOGICAL CLAIM OF SPECIAL DISCOUNT CAN ONLY BE MADE WHEN SOMETHING ADDITIONAL AND IN SPECI FIC TERMS IS BROUGHT TO SUBSTANTIATE THE CLAIM. IN THIS CASE, NO SUCH E VIDENCE HAS BEEN BROUGHT TO PROVE THAT THE SPECIAL DISCOUNT HAS BEEN ALLOWED ONLY TO FIVE PARTIES FOR ANY BUSINESS PURPOSE. UNLESS THERE IS A SCHEME IN W RITING SUCH TYPE OF CLAIM OF APPELLANT APPEARS TO BE THE EFFORT TO MAKE ADJUSTMENT OF PROFITS. IN VIEW OF ABOVE DISCUSSION, THE CLAIM OF SPECIAL DISC OUNT MADE FOR THE FIRST TIME HAS NOT BEEN FOUND TO BE ACCEPTABLE AND THEREF ORE ALL THE CONTENTIONS PUT FORTH BY THE APPELLANT TO MAKE SUCH CLAIM ARE H EREBY REJECTED. AS SUCH THE WHOLE OF THE CLAIM OFRS.3,75,095/-IS DISALLOWED AND THE INCOME OF THE APPELLANT IS ENHANCED TO THE EXTENT OF RS.3,60,095/ - ACCORDINGLY. THEREFORE, AO IS DIRECTED TO DISALLOW RS.3,75,095/- INSTEAD OF RS.15,000/- DISALLOWED BY THE A.O. SINCE THE APPELLANT HAS FURN ISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED THE- INCOME TO THE EXTENT OF RS.3,75,095/-, THE PENALTY PROCEEDINGS U/S.271(1)(C ) OF THE ACT ARE INITIATED ACCORDINGLY'. 4. ON FURTHER APPEAL, THE ITAT UPHELD THE FINDINGS OF THE LD. CIT(A) IN THEIR ORDER DATED 12.3.2010 IN ITA NO.1298/AHD./ 2007. 5. AS IS APPARENT, THE LD. CIT(A) ALONE INITIATED PENALTY U/S 271(1)(C) OF THE ACT DURING THE COURSE OF APPELLATE PROCEEDINGS WHEN HE ENHANCED THE DISALLOWANCE TO RS.3,75,095/-. HOW EVER, THE PENALTY HAS BEEN IMPOSED BY THE AO IN THE INSTANT C ASE IN RESPONSE ITA N O.680/AHD/09 4 TO A SHOWCAUSE NOTICE DATED 05-03-2007 ISSUED ON 06 -03-2007. THE ASSESSEE DID NOT RESPOND TO THE SAID NOTICE. IN RES PONSE TO ANOTHER SHOWCAUSE NOTICE DATED 20-09-2007, THE ASSESSEE R EPLIED THAT SINCE THEY HAD FURNISHED ALL THE PARTICULARS OF INC OME, PENALTY COULD NOT BE IMPOSED U/S 271(1)(C) OF THE ACT ,INTER ALIA , IN VIEW OF DECISIONS IN HINDUSTAN STEEL LTD. V. STATE OF ORIS SA [1972] 83 ITR 26 (SC),K. C. BUILDERS V. ASSTT. CIT [2004] 265 ITR 562/135 TA XMAN 461 (SC),(III) CIT V. AJAIB SINGH & CO. [2002] 253 ITR 630 (PUNJ & HAR.), COMMISSIONER OF INCOME TAX VS. H.M.A. UDYOG (P) LTD (2007) 211 CTR (DEL) 5 43,BALAJI VEGETABLE PRODUCTS P. LTD. VS. CIT. (2007) 211 CTR (KARNATAK A) 38, NATIONAL TEXTILE VS. CIT 249 ITR 125 (GUJ),CIT VS. SANTOSH FINANCIERS 24 7 ITR 742 (KER) AND SHIVLAL TAK VS. CIT251 ITR 373 (RAJ). HOWEVER, THE AO DID N OT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND IMPOSED A PENALTY OF RS.1,37,8 47/- @100% OF THE TAX SOUGHT TO BE EVADED ON THE INCOME OF RS.3,75,095/- FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 6 ON APPEAL, THE LD. CIT(A) UPHELD THE LEVY OF PENA LTY ON THE GROUND THAT THE ASSESSEE COULD NOT EXPLAIN THE CORR ECTNESS OF ITS CLAIM EVEN DURING THE PROCEEDINGS BEFORE HIM. 7 THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON B EHALF OF THE ASSESSEE ,AT THE OUTSET, CONTENDED THAT THOUGH PENA LTY PROCEEDINGS HAVE BEEN INITIATED BY THE LD. CIT(A), PENALTY HAS BEEN IMPOSED BY THE AO EVEN WHEN HE DID NOT HAVE JURISDICTION TO DO SO. ON THE OTHER HAND, THE LD. DR CONTENDED THAT POWERS OF THE CIT( A) ARE CONTERMINOUS WITH THE POWERS OF THE AO AND THEREFOR EM WHEN THE LD. CIT(A) ISSUED DIRECTIONS TO THE AO FOR ENHANCEMENT OF INCOME, THE LATTER COULD IMPOSE PENALTY U/S 271(1)(C) OF THE AC T. 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM THE FACTS OF THE CA SE, THE AO NOWHERE RECORDED HIS SATISFACTION DURING THE COURSE OF ASSESSMENT ITA N O.680/AHD/09 5 PROCEEDINGS FOR EITHER CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF BY THE A SSESSEE NOR EVEN HE INITIATED PROCEEDINGS U/S 271(1)(C) OF THE ACT WHEN HE DISALLOWED AN AMOUNT OF RS. 15,000/- OUT OF CLAIM OF SPECIAL D ISCOUNT OF RS. 3,75,095/-. ONLY WHEN DISALLOWANCE WAS ENHANCED TO RS. 3,75,095/- BY THE LD. CIT(A) DURING THE COURSE OF APPELLATE P ROCEEDINGS THAT HE RECORDED HIS SATISFACTION THAT THE ASSESSEE FUR NISHED INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY, INITIATED PE NALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. AS HELD BY THE HONBLE APEX COURT IN CIT V. ANGIDI CHETTIAR [1962] 44 ITR 739 , S ATISFACTION BEFORE CONCLUSION OF THE PROCEEDINGS UNDER THE ACT, AND NOT THE ISSUE OF A NOTICE OR INI TIATION OF ANY STEP FOR IMPOSING PENALTY IS A CONDITION FOR THE EXERCISE OF THE JURI SDICTION FOR IMPOSITION OF PENALTY. IN THE INSTANT CASE, THERE IS NO EVIDENCE ON THE RE CORD THAT THE AO WAS SATISFIED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THAT TH E ASSESSEE CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS THEREOF. TRUE, THE POWERS OF THE LD. CIT(A) ARE CONTERMINOUS WITH THE POWERS OF THE AO[CIT VS. KANPUR COAL SYNDICATE,53 ITR 225(SC)] AS CONTENDED BY THE LD. DR, BUT PENALTY PROCEEDINGS ARE DISTINCT FROM ASSESSMENT PROCEEDINGS. AS IS EVIDENT FROM A MERE GLANCE AT TH E RELEVANT PROVISIONS, CONCERNED AUTHORITY HAS TO RECORD HIS S ATISFACTION IN THE COURSE OF PROCEEDINGS BEFORE HIM FOR INITIATING PEN ALTY PROCEEDINGS. FOR THE SATISFACTION OF ONE AUTHORITY, PENALTY CAN NOT BE IMPOSED BY ANOTHER NOR SUCH POWERS CAN BE DELEGATED. ONLY TH E LD. CIT(A) WHILE ENHANCING THE DISALLOWANCE RECORDED HIS SATI SFACTION THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME . THE PROVISIONS OF SEC. 271(1)(C) OF THE ACT EMPOWER, INTER ALIA, T HE LD. CIT(A) TO INITIATE PROCEEDINGS FOR IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. THE RELEVANT PROVISIONS READ AS UNDER 271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTICES, CO NCEALMENT OF INCOME, ETC. (1) IF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON- ITA N O.680/AHD/09 6 (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, OR HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY,- (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D) , IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF T AX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFITS OR THE FURNISHING OF INACCURATE PAR TICULARS OF SUCH INCOME OR FRINGE BENEFITS. 8.1 IN THE LIGHT OF AFORESAID PROVISION, IT IS ONLY THE LD. CIT(A) WHO RECORDED HIS SATISFACTION IN THE PROCEEDINGS BEFORE HIM, COULD IMPOSE PENALTY U/S 271(1)(C) OF THE ACT. THE AUTHOR ITY OF THE AO AND FIRST APPELLATE AUTHORITY IS WELL DEFINED. THE PENA LTY IMPOSING AUTHORITY HAS TO KEEP HIMSELF CONFINED TO PROCEEDIN GS BEFORE HIM AND IF ON SUCH PROCEEDINGS ANY OF THE AFORESAID DEF AULTS OR ACTS BRINGS THE ASSESSEE UNDER THE PENALTY PROVISIONS, H E CAN IMPOSE SUITABLE PENALTY ONLY FOR THAT. WHILE DEALING WITH A SIMILAR ISSUE IN THE CONTEXT OF PROVISIONS OF SEC. 28(1)(C) OF THE I NCOME-TAX ACT,1922(CORRESPONDING TO PROVISIONS OF SEC. 271(1) (C) OF THE ACT) , THE HONBLE ALLAHABAD HIGH COURT IN CIT VS. SHADIRA M BALMUKUND,84 ITR 183, HELD AS UNDER IT SEEMS TO US CLEAR THAT THE PROVISION CONTEMPLAT ES DISTINCT JURISDICTIONS IN THE INCOME-TAX OFFICER, THE APPELLATE ASSISTANT COMMISS IONER AND THE APPELLATE TRIBUNAL IN RELATION TO THE PROCEEDINGS PENDING BEF ORE THOSE RESPECTIVE AUTHORITIES SO FAR AS THE IMPOSITION OF PENALTY IS CONCERNED. IT WILL BE APPARENT FROM THE LANGUAGE EMPLOYED IN THE SUB-SECTION THAT THE AUTHORITY IMPOSING THE PENALTY CAN DO SO ONLY UPON BEING SATISFIED THAT A PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR DELIBERATELY FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, AND THAT SATISFACTION MUST BE IN THE COURSE OF PROCEEDINGS UNDER THE ACT. THOSE PROCEEDINGS MUST BE PROCEEDINGS BEFORE THAT A UTHORITY, AND THEY MUST BE PROCEEDINGS NECESSARILY UNDER SOME PROVISION OF THE ACT OTHER THAN SECTION 28. IN ITA N O.680/AHD/09 7 THE INSTANT CASE, THE APPELLATE ASSISTANT COMMISSIO NER FOUND CASH CREDITS IN THE AMOUNT OF RS. 46,601 TO REPRESENT INCOME FROM UNDIS CLOSED SOURCES. IF A PENALTY COULD BE IMPOSED IN RESPECT OF THAT AMOUNT, IT LAY WITHIN THE JURISDICTION OF THE APPELLATE ASSISTANT COMMISSIONER. THE AMOUNTS WERE DISCOVERED IN THE COURSE OF THE APPELLATE PROCEEDING BEFORE HIM. THEY WERE D ISCOVERED BY HIM. IT WAS FOR HIM THEN TO IMPOSE THE PENALTY IF HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME OR HAD DELI BERATELY FURNISHED INACCURATE PARTICULARS OF IT. THE INCOME-TAX OFFICER WAS SEIZE D OF THE ASSESSMENT PROCEEDING, AND IT WAS NOT DURING THE ASSESSMENT PR OCEEDING THAT THE SUM OF RS. 46,601 WAS DISCOVERED. WE ARE SATISFIED THAT THE TR IBUNAL IS RIGHT IN HOLDING THAT THE PENALTY ORDER WAS BAD IN LAW. 8.2 A SIMILAR VIEW WAS TAKEN IN CIT VS. DWARKA PR ASAD SUBHASH CHANDRA (1974), 94 ITR 154 (ALL) IN THE CONTEXT OF PROVISIO NS OF SEC. 271(1)(C) OF THE ACT. WE FIND THAT THE HONBLE CALCUTTA HIGH COURT ALSO W HILE DEALING WITH A SIMILAR ISSUE AS TO WHETHER THE INCOME-TAX OFFIC ER COULD LEVY PENALTY IN RESPECT OF THE ENHANCEMENT MADE BY THE APPELLATE AS SISTANT COMMISSIONER, CONCLUDED AS UNDER: ON MERITS, IT APPEARS TO US THAT THE J UDGMENT HAS FOLLOWED THE DECISIONS OF THE ALLAHABAD HIGH COURT IN CIT V. SHADIRAM BALM UKAND [1972] 84 ITR 183 (ALL) AND CIT V. DWARKA PRASAD SUBHASH CHANDRA [197 4] 94 ITR 154 (ALL) AND ALSO THE DECISION OF THE GUJARAT HIGH COURT IN CIT V. LAKDHIR LALJI [1972] 85 ITR 77 (GUJ). LEARNED ADVOCATE FOR THE ASSESSEE ALSO POIN TED OUT THAT THE SUPREME COURT HAS ALREADY PRONOUNCED ON THE QUESTION IN CIT V. ANGIDI CHETTIAR [1962] 44 ITR 739 .I N THE INSTANT CASE, THE ASSESSMENT WAS MODIFIED BY THE APPELLATE ASSISTANT COMMISSIONER WHO INCLUDED IN THE TOTAL IN COME OF THE ASSESSEE AMOUNTS WHICH WERE STATED TO BE BUSINESS INCOME. TH E SUPREME COURT CLEARLY LAID DOWN IN THE ABOVE CASE THAT THE POWER TO IMPOS E PENALTY DEPENDED UPON THE SATISFACTION OF THE INCOME-TAX OFFICER IN THE COURS E OF PROCEEDINGS UNDER THE ACT. IN THE INSTANT CASE, THE PROCEEDINGS WERE NOT BEFOR E THE INCOME-TAX OFFICER BUT BEFORE THE APPELLATE ASSISTANT COMMISSIONER. 8.3 IN VIEW OF THE FOREGOING, WE ARE OF THE OPIN ION THAT THE AO COULD NOT ASSUME JURISDICTION TO IMPOSE PENALTY U/ S 271(1)(C) OF THE ACT ,WHEN HE DID NOT RECORD HIS SATISFACTION BEFORE CONCLUSION OF THE PROCEEDINGS BEFORE HIM THAT THE ASSESSEE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS THERE OF. NOTHING IN THE STATUTE INDICATES THAT THE AO HAS ANY JURISDICTION TO IMPOSE PENALTY IN A CASE WHERE THE CIT(A) IS SATISFIED IN THE COURSE OF PROC EEDINGS BEFORE HIM THAT PENALTY PROCEEDINGS SHOULD BE TAKEN. CONSEQUENTLY, WE VACATE THE FINDINGS OF THE LD. CITA) AND CANCEL THE PENALTY LEVIED BY THE AO. ITA N O.680/AHD/09 8 9. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 15-12-2010 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 15-12-2010 COPY OF THE ORDER FORWARDED TO: 1. M/S SHILP GRAVURES, 67-68, MAHALAXMI INDUSTRIAL ESTATE, NEAR BOMBAY CONDUCTORS, VATVA, AHMEDABAD 2. ACIT, CIRCLE-6, AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XI, AHMEDABAD 5. DR, ITAT BENCH-C, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD