M/s Dewan Engg. Works, Sirhind V. DCIT, Mandi Gobindgarh

ITA 963/CHANDI/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73492 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-01-2014
• Assessment Year: 1991-1992
• Appeal Filed On: 04-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Assessee Lawyers: R R THAKUR
• Keywords: Corroborative evidences; Condonation of delay; Reassessment proceedings
• Section: 68; 246; 69; 27; 28; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 963/CHD/2011 ASSESSMENT YEAR : 1991-92 M/S DEWAN ENGINEERING WORKS, VS THE DCIT, G.T.ROAD, SIRHIND CIRCLE, PAN : ASHPS-0569F MANDI GOBINDGARH (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.R.THA KUR RESPONDENT BY : SHRI J.S.NAGAR DATE OF HEARING : 30.01.2014 DATE OF PRONOUNCEMENT : 26.02.2014 ORDER PER T.R.SOOD, AM THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER DATED 29.07.2011, PASSED BY THE LD. CIT(APPEALS) PATIALA. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUND OF APPE AL : 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEAL) HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE PENALTY A MOUNTING TO RS. 37,10,000/- U/S 271(1) (C) IMPOSED BY THE ASSESSING OFFICER WHICH IS IN UTTER DISREGARD OF FACTS & CIRCUMSTANCE OF THE CASE . THE PENALTY IS LIABLE TO BE CANCELLED. 2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EAL) HAS ERRED IN CONFIRMING THE BORDER OF PENALTY U/S 271 ( L)(C) WHICH WAS MADE AFTER THE EXPIRY OF TIME LIMIT AS PROVIDED IN THE I NCOME TAX ACT 1961. THE ASSESSING OFFICER HAD TO IMPOSE THE PENALTY BY 31/1 0/1998 I, E WITHIN THE TIME LIMIT PRESCRIBED FROM THE RECEIPT OF THE QUANT UM ORDER FROM THE COMMISSIONER OF INCOME TAX (APPEAL), WHERE AS THE P ENALTY HAS BEEN IMPOSED ON 26/02/2004 I, E AFTER THE EXPIRY OF THE SAID PERIOD. THE ORDER PASSED AFTER THE EXPIRY OF THE TIME LIMIT IS LIABLE TO BE CANCELLED. 3. THAT THE ADDITION OF RS. 231ACS ON THE DIFFERENC E OF VALUATION OF STOCK AND RS. 42,25,OOO/- ON ACCOUNT OF CASH CREDIT S WAS LIABLE TO BE DELETED, HAD THE APPEALS TO THE HONOUABLE ITAT BEEN FILED IN TIME AS THE AUTHORITIES BELOW FOUND THAT NO REGULAR BOOKS OF AC COUNT WERE MAINTAINED BY THE APPELLANT AND THE ASSESSMENT WAS FRAMED EXPA RTE U/S 144. THE APPEAL ON QUANTUM WAS ALSO DECIDED EXPARTE. THE PEN ALTY IMPOSED IS LIABLE TO BE DELETED. 2 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEAL) HAS ERRED TO UPHOLD THE IMPOSITION OF PENALTY WITHOUT GOING THRO UGH THE SUBMISSION MADE BY THE APPELLANT FOR WHICH THE PENALTY IMPOSED IS LIABLE TO BE CANCELLED. 5. THAT THE LD. COMMISSIONER OF INCOME TAX (APPE ALS) HAS WRONGLY UPHOLD THAT THE ALLEGED ADDITION MADE BY THE ASSESS ING OFFICER U/S 68 & 69 OF THE INCOME TAX ACT, 1961 AS CORRECT WHEN THER E WERE NO BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT. 3. AFTER HEARING BOTH THE PARTIES, WE FIND THAT A S EARCH WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE. DURING THE SEARCH, IT WAS FOUND THAT THE ASSESSEE WAS CARRYING EXCESS STO CK AMOUNTING TO RS. 23,00,000/-. THIS AMOUNT WAS SURRE NDERED IN THE STATEMENT RECORDED UNDER SECTION 132(4) READ WI TH EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. HOWE VER, SAME HAS NOT BEEN INCLUDED IN THE RETURNED INCOME. FURTH ER, IT WAS NOTICED FROM THE DOCUMENTS FILED ALONGWITH THE RETU RN THAT ASSESSEE HAD SHOWN ADVANCES RECEIVED FROM CUSTOMERS AMOUNTING TO RS. 43,25,000/- FOR WHICH NO EVIDENCE WAS FILED. THEREFORE, THESE TWO AMOUNTS WERE ADDED TO THE INCO ME OF THE ASSESSEE. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( APPEALS) WHO SET ASIDE THE ASSESSMENT WITH A DIRECTION TO FR AME DENOVO ASSESSMENT AFTER NECESSARY ENQUIRIES. IN THE SET A SIDE PROCEEDINGS, NO EVIDENCE WAS FILED AND VARIOUS ADJO URNMENTS WERE SOUGHT. ONLY PHOTO COPIES OF THE BILLS OF THE SALES TO THE PARTIES FROM WHOM ADVANCES WERE SAID TO HAVE BEEN R ECEIVED WERE FILED. THE ASSESSING OFFICER SPECIFICALLY RE QUESTED THE ASSESSEE TO FILE THE REGISTRATION COPIES OF THE COM BINES BUT THE SAME WERE NOT FILED. ULTIMATELY, AN AMOUNT OF RS. 2 3,00,000/- ON ACCOUNT OF SURRENDERED AMOUNT AND RS. 43,25,000/- O N ACCOUNT OF CASH CREDITS PERTAINING TO ADVANCES RECEIVED FROM C USTOMERS WAS 3 ADDED TO THE INCOME OF THE ASSESSEE AND PENALTY PRO CEEDINGS UNDER SECTION 271(1)(C) WERE INITIATED. DURING PEN ALTY PROCEEDINGS, IN RESPONSE TO THE SHOW CAUSE NOTICE, IT WAS MAINLY STATED THAT ASSESSING OFFICER HAS NOT MADE PROPER E NQUIRY AND VERIFICATION OF THE EVIDENCE AVAILABLE ON RECORD. IT WAS SUBMITTED THAT PENALTY PROCEEDINGS ARE DIFFERENT FROM ASSESSM ENT PROCEEDINGS AND ASSESSEE IS ENTITLED TO SUBMIT FRES H EVIDENCE DURING PROCEEDINGS. IT WAS FURTHER SUBMITTED THAT ASSESSING OFFICER HAS NOT RECORDED PROPER SATISFACTION. IT W AS ALSO SUBMITTED THAT PENALTY ORDER HAS BEEN PASSED BEYOND THE LIMITATION AND THEREFORE, SAME IS BARRED BY LIMITAT ION. ON MERITS, IT WAS SUBMITTED THAT AMOUNT OF RS. 23,00,000/- WAS SURRENDERED ON THE ADVICE OF THE OFFICER PRESENT DURING THE SEA RCH AND SHRI DEWAN CHAND, MANAGING PARTNER WAS NERVOUS AND PUZZL ED AND HE MADE SURRENDER WITHOUT UNDERSTANDING THE IMPLICA TION. TOTAL PURCHASE BILLS WERE NOT PROPERLY ACCOUNTED DURING T HE SEARCH AND THAT IS WHY, SURRENDER WAS MADE. IN RESPECT OF THE ADDITION AMOUNTING TO RS. 43,25,000/-, IT WAS MAINLY SUBMITT ED THAT AMOUNT WAS RECEIVED AS ADVANCE FROM CUSTOMER AND CO MBINE MACHINES WERE SOLD TO THESE PARTIES IN THE FOLLOWIN G YEARS. IN FACT, SOME CONFIRMATIONS AND AFFIDAVITS WERE FILED BEFORE THE ASSESSING OFFICER WHICH HAVE NOT BEEN PROPERLY CONS IDERED. 5. THE ASSESSING OFFICER EXAMINED THE ABOVE SUBMISS IONS AND OBSERVED THAT NO DOUBT, PENALTY PROCEEDINGS ARE DIS TINCT AND SEPARATE FROM ASSESSMENT PROCEEDINGS AND THE MATTER CAN BE EXAMINED ON THE BASIS OF THE MATERIAL PRODUCED DURI NG APPELLATE PROCEEDINGS. HOWEVER, SINCE NOTHING WAS PRODUCED D URING PENALTY PROCEEDINGS, THEREFORE, THE CLAIM OF THE AS SESSEE COULD 4 NOT BE ENTERTAINED. HE ALSO OBSERVED THAT ASSESSIN G OFFICER HAS MADE DETAILED OBSERVATIONS REGARDING SURRENDER OF R S. 23 LACS AS WELL AS CASH CREDIT AMOUNTING TO RS. 43,25,000/- IN THE ASSESSMENT ORDER AND SINCE THERE IS NOTHING FILED D URING THE PENALTY PROCEEDINGS TO SUBSTANTIATE THESE CLAIMS, T HEREFORE, PENALTY WAS LEVIABLE. IN THIS REGARD, HE RELIED ON THE DECISION OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN CASE OF DCI T, SPECIAL RANGE PATIALA VS ROAD MASTER INDUSTRIES OF INDIA LT D. ITA 700/CHD/1998. HE FURTHER OBSERVED THAT ORDER WAS NO T TIME BARRED BECAUSE LIMITATION HAS TO BE RECKONED AFTER THE DATE OF RECEIPT OF THE ORDER FROM ITAT. ON MERITS OF THE T WO ADDITIONS, OBSERVATIONS WERE MADE VIDE PARA 6 & 7, WHICH ARE A S UNDER: 6) THE NEXT ISSUE TAKEN BY THE ASSESSEE IS THAT EXC ESS STOCK OF RS. 23,00,000/- WAS NOT FOUND DURING THE COURSE OF SEARCH. IT IS A MATT ER OF RECORD THAT DURING THE COURSE OF SEARCH, IT WAS FOUND THAT ASSESSEE HAD NOT ACCOUNTE D FOR STOCK WORTH RS. 23,00,000/- IN ITS BOOKS OF ACCOUNTS AND THE ASSESSEE FAILED TO EXPLAI N THE SOURCE OF INVESTMENT OF RS. 23,00,000/-. THE ASSESSEE, THEREFORE, SURRENDERED T HIS AMOUNT OF RS. 23,00,000/- AS ITS INCOME FOR THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1991-92 U/S 132(4) READ WITH EXPLANATION 5 TO SECTION 271(1)(C). THE SAID AMOUNT OF RS. 23,00,000/- HAD NOT BEEN INCLUDED IN THE RETURN OF INCOME THOUGH IT OUGHT TO HAVE BEEN DONE. SINCE THE SOURCE OF INVESTMENT OF RS. 23,00,000/- IN STOCK NOT REFLECTE D IN THE REGULAR BOOKS OF ACCOUNT REMAINED UNEXPLAINED, THE AMOUNT OF RS. 23,00,000/- WAS TREATED AS ASSESSEES INCOME U/S 69. NOW THE PLEA OF THE ASSESSEE THAT THE SAID STATEMENT U/S 132(4) WAS MADE WHEN SHRI DEEWAN CHAND WAS PUZZLED, NERVOUS AND WAS NOT IN A COOL MIND IS OF NO USE BEING AN AFTER THOUGHT AND BASELESS. HENCE THE SAME IS RE JECTED. 7. THE NEXT ISSUE TAKEN BY THE ASSESSEE IS THAT RS. 43,25,000/- WERE TRADE ADVANCES AND NOT CREDITS. FACTS IN BRIEF ARE THAT ASSESSMENT IN THIS CASE WAS COMPLETED U/S 144/250(6) ON 27.03.1997. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO FURNISH EVIDENCE TO PROVE THE GENUI NENESS OF THESE CREDITORS. THE ASSESSEE FILED PHOTOCOPIES OF BILLS BEARING NO. 165 1 TO 1654, 1656, 1664, 1667, 1674, 1673, 1658, 1659, 1671, 1655, 1660, 1661, 1662, 165 7, 1668, 1669, 1753 AND 1704. SINCE THE ASSESSEE NEITHER PRODUCED THE ORIGINAL BILLS NO R DO THESE BILLS HAVING THE COMPLETE DETAILS OF THE PURCHASERS, THE SAME COULD NOT BE VE RIFIED. THE ASSESSEE HAD ALSO PRODUCED ONE PHOTOCOPY OF REGISTRATION CERTIFICATE PERTAINING TO PSB FINANCE AND THREE SLIPS FROM PERSONS NAMELY S/SHRI BHAG SINGH, IQBAL SINGH, LABH SINGH S/O SHRI AMAR SINGH AND BALBIR CHAND S/O NAND LAL. ALL THESE SLIP S HAD BEEN HAND WRITTEN ON PLAIN PAPER AND DO NOT CONTAIN THE FULL PARTICULARS OF THE COMB INES ALLEGEDLY SOLD BY THE APPELLANT TO THESE PERSONS AND IN THE ABSENCE OF THE COMPLETE AD DRESS, THE DETAILS OF THE PURCHASES AND THE PURCHASE PRICE AND THE DATES OF THE PAYMENT S, THESE SLIPS HAVE NO EVIDENTIARY VALUE. IT WAS, FURTHER, CLAIMED THAT THESE PERSONS SOLD THESE COMBINES TO SOME OTHER PERSONS AND AGAIN THERE WAS NO EVIDENCE TO ESTABLIS H THE IDENTITY OF THE SUBSEQUENT BUYERS OF THESE COMBINES. THE AO HAD RIGHTLY INVOKE D THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT, 1961 AND MADE THE ADDITION OF RS. 4 3,25,000/- ON THIS ACCOUNT. EVEN NOW, THE ASSESSEE HAS SIMPLY RE-ITERATED ITS PLEA WHICH WAS TAKEN BEFORE THE AO AT THE TIME OF ASSESSMENT PROCEEDING AND AT APPELLATE STAGE. THAT TOO WITHOUT ANY SUPPORTING EVIDENCE. IT MAY BE MENTIONED HERE THAT ASSESSEE HAS NOT FILE D ANY DOCUMENTARY EVIDENCE ALONGWITH ITS REPLY. NO MATERIAL, WHATSOEVER, HAS BEEN PRODUC ED TO SUPPORT ITS CONTENTION. NO REGULAR BOOKS OF ACCOUNTS, ORIGINAL SALE BILLS AND MODE OF PAYMENT HAS BEEN FORTH COMING FROM THE ASSESSEE AND IN THE ABSENCE OF THESE VITAL DOCUMENT S, THE ONUS WHICH WAS ON THE ASSESSEE TO PROVE THE IDENTITY OF THE PERSONS, THEI R CREDIT WORTHINESS AND THE GENUINENESS 5 OF THE TRANSACTIONS HAS NOT BEEN DISCHARGED BY THE ASSESSEE. THUS, IT IS CLEAR THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME AND IS NOT ABLE TO SUBSTANTIATE ITS CLIAM DURING THE COURSE OF ASSESSMENT / PENALTY PROCEEDIN GS. 6. AFTER RECORDING THE ABOVE OBSERVATIONS, THE ASSE SSING OFFICER REFERRED TO VARIOUS CASE LAWS INCLUDING THE DECISION OF HON'BLE SUPREME COURT IN CASE OF K.P. MADHUSUDAN VS CIT 251 ITR 99 AND LEVIED THE PENALTY AT THE MINIMUM RATE O F 100%. 7. ON APPEAL, IT WAS MAINLY SUBMITTED THAT ASSESSME NT WAS ORIGINALLY SET ASIDE WITH DIRECTION TO COMPLETE THE ASSESSMENT ON DENOVO BASIS AFTER MAKING NECESSARY ENQUIRIES AND V ERIFICATION OF THE BOOKS OF ACCOUNT. HOWEVER, AGAIN ASSESSMENT WA S COMPLETED ON EX-PARTE BASIS UNDER SECTION 144 OF TH E ACT WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSEE. BY THE TIME , NO RELEVANT DOCUMENTS WERE AVAILABLE WITH THE ASSESSEE AND THER EFORE, SAME COULD NOT BE PRODUCED DURING THE QUANTUM APPEALS WH ICH RESULTED IN THE DISPOSAL OF APPEAL. IT WAS STATED THAT BOOK S OF ACCOUNT REMAINED WITH THE DEPARTMENT AND THEREFORE, ASSESSE E COULD NOT FILE APPEAL BEFORE THE TRIBUNAL IN TIME. THE APPEA L WAS ULTIMATELY DISMISSED FOR DELAY. IT WAS SUBMITTED T HAT SUM OF RS. 43,25,000/- SHOWN AS ADVANCES FROM CUSTOMERS AGAINS T SALE OF HARVESTER COMBINE MACHINES SOLD IN SUBSEQUENT YEARS COULD HAVE BEEN VERIFIED FROM THE BOOKS OF ACCOUNT IMPOUNDED B Y THE PARTIES. THE ASSESSEE HAD ALSO FILED AFFIDAVITS OF SOME OF THE PARTIES. THEREFORE, ASSESSEE HAD DISCHARGED ITS BU RDEN. 8. THE LD. CIT(APPEALS) ADJUDICATED THE ISSUE VIDE PARA 3.5 AND 3.6, WHICH ARE AS UNDER : A REPORT WAS CALLED FOR FROM THE A.O. IN THIS REGAR D WHO IN HIS REPORT NO. 74 DATED 04.03.2011 REITERATED AS FOLLOWS: THE ONLY CONTENTION RAISED BY THE APPELLANT IN ITS WRITTEN SUBMISSION IS THAT THE BOOKS OF ACCOUNT WERE WITH THE DEPARTMENT WHICH WAS ALLEGEDL Y SEIZED AT THE TIME OF SEARCH, DUE TO WHICH NO DOCUMENTS COULD BE PRODUCED BY IT DURING A SSESSMENT PROCEEDINGS AS WELL AS 6 DURING PENALTY PROCEEDINGS. REGARDING ASSESSEES CO NTENTION THAT ITS BOOKS OF ACCOUNT WERE WITH THE DEPARTMENT, IT IS SUBMITTED THAT AS P ER PARA 6 OF ASSESSMENT ORDER DATED 27.03.1997 PASSED IN THIS CASE BY THE A.O. , IT HAS BEEN SPECIFICALLY MENTIONED THAT THE ASSESSEE WAS ASKED TO PRODUCE ALL THE ACCOUNT BOOKS ON THE DATE OF HEARING I.E. 15.1.1996. IT IS FURTHER MENTIONED IN THIS PARA OF ASSESSMENT ORDER THAT THE COUNSEL WAS ALSO REQUIRED TO PRODUCE BOOKS OF ACCOUNTS ON THE B ASIS OF WHICH ALLEGED STATEMENT OF AFFAIRS HAD BEEN PREPARED. AS PER FURTHER DISCUSSIO N IN THIS PARA OF THE ASSESSMENT ORDER, IT HAS BEEN MENTIONED THAT SH. V.K. GUPTA, C.A. COUNSE L FOR THE ASSESSEE WHEN APPEARED ON 17.02.1997 BEFORE THE A.O. STATED THAT THE BOOKS OF ACCOUNT FOR THE RELEVANT PERIOD WERE NOT MAINTAINED BY THE ASSESSEE. IN PARA 8 OF T HE ASSESSMENT ORDER, THE A.O. AGAIN MENTIONED THAT VERIFICATION OF CREDITS AMOUNTING TO RS. 43,25,000/- WAS NOT POSSIBLE THROUGH BOOKS OF ACCOUNTS AS NO REGULAR BOOKS OF AC COUNTS WERE MAINTAINED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. AS SUCH, FROM THIS DISCUSSION IN THE ASSESSMENT ORDER ON A NUMBER OF OCCASIONS, IT IS WE LL ESTABLISHED THAT THE ASSESSEE HAD NOT MAINTAINED / PRODUCED REGULAR BOOKS OF ACCOUNTS FOR THE PERIOD UNDER CONSIDERATION. ASSESSEES CONTENTION THAT ITS BOOKS OF ACCOUNT ARE WITH THE DEPARTMENT, IS BASELESS, NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE AND THIS DESE RVES TO BE REJECTED. FOR THE REMAINING ISSUES RAISED IN THE WRITTEN SUBMISSION, IT IS SUBMITTED THAT ALL THESE ISSUES HAVE BEEN DISCUSSED IN THE PENALTY ORDER AND AS SUCH THE RELIANCE IS PLACED ON THE PENALTY ORDER PASSED BY THE UNDERSIGNED. FOR, READY REFERENCE A C OPY OF ASSESSMENT ORDER DATED 27.03.1997 IS ENCLOSED HEREWITH. 3.6 I HAVE GONE THROUGH THE FACTS OF THE CASE, AND PENALTY ORDER AND CONTENTIONS OF THE COUNSEL FOR THE APPELLANT. AFTER CAREFUL CONSIDERAT ION, I AM OF THE VIEW THAT THE APPELLANT HAD FAILED TO SUBSTANTIATE THE EXPLANATION REGARDIN G THE ADDITION MADE AS MENTIONED IN THE PENALTY ORDER. THEREFORE THE ADDITION WAS RIGHTLY M ADE BY THE A.O. THE APPELLANT FURTHER STATING THAT THOUGHT THE ADDITIONS MADE WERE PURELY ON ADHOC AND ARBITRARY BASIS THEREFORE NO PENALTY WAS LEVIABLE, HAS NO FORCE, AS PENALTY P ROCEEDINGS ARE ALTOGETHER DIFFERENT FROM ASSESSMENT PROCEEDINGS. NEVERTHELESS, EXPLANATION 1 OF SECTION 271(1)(C) STIPULATES, THAT IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME, IF ANY PERSON OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE OR WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE, THE AMOUN T ADDED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEROF SHALL BE DEEMED T O REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. ONCE THERE I S APPELLANTS OWN ADMISSION THAT THE AMOUNT IN QUESTION REPRESENTED HIS CONCEALED INCOME , THERE IS ABSOLUTELY NO OTHER EVIDENCE REQUIRED TO SHOW THAT THE AMOUNT DOES NOT REPRESENT HIS INCOME AND THAT IT HAS NOT BEEN CONCEALED FROM THE RETURNS [ REF: CIT V AP PADURAI CHETTIAR CO. (J.V.) (1996) 221 ITR 849 (MAD), CIT V POPULAR LUNGHI CO (1999)238 IT R 229 (MAD), CIT V JAIN BROS. (2001) 251 ITR 302 (DEL)]. THE GROUND OF APPEAL REG ARDING LIMITATION IS ALSO DISMISSED BECAUSE THE SAME IS NOT BASED UPON ANY PROPER REASO NING. 9. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT PENALTY ORDER WAS TIME BARRED BECAUSE THE SAME WAS REQUIRED TO BE PASSED WITHIN SIX MONTHS FROM THE END OF THE MON TH IN WHICH THE ORDER OF CIT(APPEALS) ON QUANTUM WAS RECEIVED A S PER SECTION 275(1)(A) OF THE ACT. HE CONTENDED THAT TH OUGH ASSESSEE HAS FIELD APPEAL BEFORE THE TRIBUNAL BUT, SINCE SAM E WAS LATE AND HAD BEEN DISMISSED AS TIME BARRED, THEREFORE ORDER PASSED BY THE TRIBUNAL SHOULD NOT BE RECKONED FOR THE PURPOSE OF LIMITATION. HE SUBMITTED THAT ADDITION OF RS. 23 LACS ON ACCOUN T OF DIFFERENCE IN VALUATION OF STOCKS AND RS. 43,25,000 /- ON ACCOUNT OF CASH CREDIT WAS LIABLE TO BE DELETED IF THE APPE AL HAD BEEN 7 FILED IN TIME BEFORE THE TRIBUNAL BECAUSE LOWER AUT HORITIES HAD FOUND THAT NO REGULAR BOOKS OF ACCOUNT WERE MAINTAI NED BY THE ASSESSEE AND THEREFORE, NOW PENALTY CANNOT BE LEVIE D. HE ALSO SUBMITTED THAT ADDITION HAS BEEN WRONGLY CONFIRMED UNDER SECTION 68 AND 69 OF THE ACT WHEN THE ASSESSEE WAS NOT MAIN TAINING BOOKS OF ACCOUNT. HE ALSO RELIED ON THE DECISION OF HON'BLE PUNJAB AND HARYANA HIGH COURT IN CASE OF HARIGOPAL SINGH VS. CIT, 258 ITR 85. 10. ON THE OTHER HAND, LD. DR SUBMITTED THAT PENALT Y ORDER IS NOT TIME BARRED BECAUSE AS PER THE PROVISIONS OF SE CTION 275(1)(A) OF THE ACT, THE SAME CAN BE PASSED BEFORE THE EXPIRY OF THE FINANCIAL YEAR WITHIN SIX MONTHS FROM THE END O F THE MONTH IN WHICH THE ORDER OF THE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISSIONER / COMMISSIONER AS THE CASE MAY BE. HE POINTED OUT THAT THE ORDER OF THE TRIBUNAL IN THIS CASE IN QUANTUM APPEAL WAS PASSED ON 25.6.2003 WHICH WAS SERVED ON THE COM MISSIONER ON 8.8.2003. THEREFORE AS PER SUB-SEC (A) OF SEC 2 75(1) PENALTY ORDER CAN BE PASSED WITHIN TIME OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER IS SERVED ON THE COMMISSI ONER. THE PENALTY ORDER HAS BEEN PASSED ON 26.2.2004 WHICH IS WITHIN SIX MONTHS. HE ALSO POINTED OUT THAT THE LD. COUNSEL F OR THE ASSESSEE CAN NOT TAKE A PLEA THAT THIS ORDER HAS BE EN PASSED BY REFUSING CONDONATION OF DELAY BECAUSE NO SUCH DISTI NCTION IS MADE IN SEC 275(1)(A). IN ANY CASE BEFORE THE ASSE SSING OFFICER THE ASSESSEE HAD SPECIFICALLY REQUESTED TO KEEP THE PENALTY PROCEEDINGS IN ABEYANCE THROUGH VARIOUS LETTERS AN D WAIT FOR THE DISPOSAL OF THE APPEAL BY THE TRIBUNAL WHICH HAVE B EEN DISCUSSED 8 BY THE ASSESSING OFFICER AT PARA 5. THEREFORE PENA LTY ORDER IS NOT TIME BARRED. 11 HE FURTHER SUBMITTED THAT THE ASSESSEE IS TRYING TO CHALLENGE THE ADDITIONS WHICH IS NOT POSSIBLE BECAU SE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE FINAL. THE ASSESSEE HAS FAILED TO INCLUDE THE AMOUNT SURRENDER ED DURING THE SEARCH AMOUNTING TO RS. 23 LACKS IN THE RETURN OF I NCOME FOR WHICH NO EXPLANATION HAS BEEN OFFERED BEFORE THE AS SESSING OFFICER, CIT(A) OR EVEN BEFORE THE TRIBUNAL. SIMILA RLY NO EXPLANATION HAS BEEN GIVEN FOR ADDITION AGAINST THE ADVANCES FROM CUSTOMERS. THEREFORE PENALTY IS JUSTIFIED. 12 WE HAVE GONE THROUGH THE RIVAL SUBMISSIONS CAREF ULLY. IN THIS CASE ORIGINAL ASSESSMENT ORDER WAS PASSED ON 2 7.3.1997. ULTIMATELY THE APPEAL WAS FILED BEFORE THE TRIBUNA L WHICH WAS LATE BY 108 DAYS. THE TRIBUNAL DISMISSED THE APPEA L IN ITAS NO. 883,884,885 & 886 FOR ASSESSMENT YEARS 1986-87, 199 0-91, 1991-92 & 1992-93 BY REFUSING TO CONDONE THE DELAY BECAUSE NO PLAUSIBLE EXPLANATION WAS GIVEN FOR LATE FILING OF THE APPEAL VIDE ORDER DATED 25.6.2003. THIS ORDER IS STATED TO HAV E BEEN RECEIVED BY THE LD. COMMISSIONER ON 8.8.2003. PARA 5 OF THE PENALTY ORDER HAS DISCUSSED THESE FACTS IN DETAIL. IT HAS BEEN NOTED THAT ORIGINAL SHOW CAUSE NOTICE FOR LEVY OF P ENALTY WAS ISSUED ON 5.6.1998 AGAINST WHICH NO REPLY WAS FILED . ANOTHER NOTICE WAS ISSUED ON 8.7.1998 AGAINST WHICH THE ASS ESSEE SUBMITTED A LETTER DATED 16.7.1998 REQUESTING THE A SSESSING OFFICER TO KEEP PENALTY PROCEEDINGS PENDING TILL TH E FINAL DISPOSAL OF THE APPEAL. THUS IT BECOMES CLEAR THAT THE ASSE SSEE HIMSELF REQUESTED THE DEPARTMENT TO KEEP PENALTY PROCEEDING S IN 9 ABEYANCE TILL THE FINAL DISPOSAL OF THE APPEAL. AS NOTED EARLIER THE APPEAL IN QUANTUM PROCEEDINGS WAS DISMISSED BY THE TRIBUNAL BY REFUSING TO CONDONE THE DELAY. THE ASS ESSEE CANNOT TAKE U TURN AND CONTEND THAT THE ORDER OF THE TRI BUNAL CANNOT BE RECKONED FOR THE PURPOSE OF SEC 275(1)(A) BECAUS E THIS HAS BEEN DISMISSED IN LIMINE. THIS IS SO BECAUSE THE ASSESSEE HAS HIMSELF TAKING A SHELTER ON THE PROCEEDINGS WHICH W AS PENDING BEFORE THE TRIBUNAL IN QUANTUM APPEAL. FURTHER NO DISTINCTION IS MADE IN SEC 275(1)(A) IN THE ORDER OF THE TRIBUNAL PASSED IN LIMINE BY REFUSING TO CONDONE THE DELAY OR OTHERWIS E. SEC 275(1)(A) READS AS UNDER: NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHA LL BE PASSED - [(A) IN A CASE WHERE THE RELEVANT ASSESSMENT OR OT HER ORDER IS THE SUBJECT-MATTER OF AN APPEAL TO THE [***] COMMISSIONER (APPEALS) UNDER 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 PROCEEDINGS, IN THE COURSE OF WHICH ACTIO N FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE [***] COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE , THE APPELLATE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER, WHICHEVER P ERIOD EXPIRES LATER :SEC 275(1)(A). THE ABOVE CLEARLY SHOWS THAT LIMITATION FOR PASSING THE PENALTY ORDER IN CASE WHERE THE APPEALS ARE PENDING WOULD B E SIX MONTHS FROM THE END OF THE MONTH IN WHICH ORDER U/S 254 IS RECEIVED BY THE LD. COMMISSIONER. THEREFORE CLEARLY A TIME OF SIX MONTHS IS AVAILABLE TO THE REVENUE. SINCE THE ORDER OF THE T RIBUNAL WAS RECEIVED BY THE DEPARTMENT ON 8.8.2003 AND THE LIMI TATION WOULD EXPIRE ON 28.2.2004. PENALTY ORDER HAS BEEN PASSED ON 26.2.2004 AND THEREFORE SAME IS NOT TIME BARRED. A CCORDINGLY WE REJECT THE FIRST CONTENTION OF THE ASSESSEE THAT TH E PENALTY ORDER IS TIME BARRED. 13 THE ASSESSEE HAS MAINLY CONTESTED THE ADDITIONS MADE IN THE ASSESSMENT ORDER BY SAYING THAT THE SURRENDER W AS MADE ON 10 ADVICE OF THE DEPARTMENT AND ADDITION ON ACCOUNT OF ADVANCES ETC. WAS NOT POSSIBLE U/S 68 BECAUSE NO BOOKS WERE MAINTAINED. IT IS SETTLED LAW THAT THE PENALTY PROCEEDINGS ARE INDEPENDENT FROM THE ASSESSMENT PROCEEDINGS. DURING PENALTY PR OCEEDINGS THE ASSESSMENT PROCEEDINGS CANNOT BE AGITATED. THI S BECOMES ABSOLUTELY CLEAR FROM THE DECISION OF HON'BLE MADHY A PRADESH HIGH COURT IN CASE OF S.S. RATANCHAND BHOLANATH VS . CIT, 210 ITR 682. IN THAT CASE TWO QUESTIONS WERE RAISED WH ICH ARE AS UNDER: (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ITOS ORDER DATED SEPT 4, 1976 WAS LEGALL Y VALID? (2) IF THE ANSWER TO QUESTION NO. (1) IS IN THE AFF IRMATIVE WHETHER THE QUESTION OF LEGALITY OF THE ASSESSMENT COULD BE CONE INTO IN PENALTY PROCEEDINGS? IN RESPECT OF QUESTION (2) THE CONTENTION AND FIND INS AOF THE HON'BLE HIGH COURT ARE AS UNDER: QUESTION NO. 2: IT IS CONTENDED FOR THE REVENUE THA T EVEN ASSUMING THAT THE ADDITION OF RS. 11,027 IN THE INCOME WAS ERRONEOUS, THE ASSESSE E CANNOT RAISE THIS QUESTION IN PENALTY PROCEEDINGS SINCE THE REASSESSMENT ORDER WA S NOT CHALLENGED IN APPEAL. THE ANSWER OF THE ASSESSEE IS THAT PENALTY PROCEEDINGS ARE QUASI-CRIMINAL IN NATURE, THAT THE DEPARTMENT HAS TO ESTABLISH IN PENALTY PROCEEDINGS THAT THERE HAS BEEN CONCEALMENT OF INCOME, THAT THOUGH THE FINDINGS IN THE ASSESSMENT ORDER CONSTITUTE EVIDENCE IN PENALTY PROCEEDINGS THEY ARE NOT CONCLUSIVE AND THE MATTER HAS TO BE DECIDED AFRESH IN PENALTY PROCEEDINGS. THEREFORE, IT IS SUBMITTED THAT THE AS SESSEE CAN CHALLENGE THE ASSESSMENT ORDER IN THE PENALTY PROCEEDINGS. THE ASSESSEE RELI ED ON THE DECISION OF THE BOMBAY HIGH COURT IN JAINARAYAN BABULAL V. CIT [1988] 170 ITR 3 99. THIS DECISION RELIES ON AN EARLIER DECISION OF THE BOMBAY HIGH COURT IN CIT V. GOKULDA S HARIVALLABHDAS [1958] 34 ITR 98, WHICH IS APPROVED BY THE SUPREME COURT IN CIT V. AN WAR ALI [1970] 76 ITR 696. IN ANWAR ALIS CASE [1970] 76 ITR 696, THE SUPREME COURT HAS INDICATED THAT THE PROVISION IN QUESTION IS PENAL IN THE SENSE THAT ITS CONSEQUE NCES ARE INTENDED TO BE AN EFFECTIVE DETERRENT WHICH WILL PUT A STOOP TO PRACTICES WHICH THE LEGISLATURE CONSIDERS TO BE AGAINST THE PUBLIC INTEREST AND HELD THAT IF THERE IS NO EV IDENCE ON THE RECORD EXCEPT THE EXPLANATION GIVEN BY THE ASSESSEE, WHICH EXPLANATIO N HAS BEEN FOUND TO BE FALSE, IT DOES NOT FOLLOW THAT THE RECEIPT CONSTITUTES HIS TAXABLE INCOME. THE COURT OBSERVED (AT PAGE 701): IT MUST BE REMEMBERED THAT THE PROCEEDINGS UNDER S ECTION 28 ARE OF A PENAL NATURE AND THE BURDEN IS ON THE DEPARTMENT TO PROVE THAT A PAR TICULAR AMOUNT IS A REVENUE RECEIPT. IT WOULD BE PERFECTLY LEGITIMATE TO SAY THAT THE MERE FACT THAT THE EXPLANATION OF THE ASSESSEE IS FALSE DOES NOT NECESSARILY GIVE RISE TO THE INFE RENCE THAT THE DISPUTED AMOUNT REPRESENTS INCOME. IT CANNOT BE SAID THAT THE FINDING GIVEN IN THE ASSESSMENT PROCEEDINGS FOR DETERMINING OR COMPUTING THE TAX IS CONCLUSIVE. HOW EVER, IT IS GOOD EVIDENCE. BEFORE PENALTY CAN BE IMPOSED THE ENTIRETY OF CIRCUMSTANCE S MUST REASONABLY POINT TO THE CONCLUSION THAT THE DISPUTED AMOUNT REPRESENTED INC OME AND THAT THE ASSESSEE HAD CONSCIOUSLY CONCEALED THE PARTICULARS OF HIS INCOME OR HAD DELIBERATELY FURNISHED INACCURATE PARTICULARS. (EMPHASIS * SUPPLIED). 11 A READING OF THE ABOVE OBSERVATIONS SHOWS THAT WHIL E ASSESSMENT PROCEEDINGS MAY CONSTITUTE GOOD EVIDENCE IN PENALTY PROCEEDINGS, TH EY ARE NOT CONCLUSIVE. THE STATUTORY AUTHORITY DEALING WITH PENALTY PROCEEDINGS MUST BE SATISFIED THAT THE ASSESSEE HAD CONSCIOUSLY CONCEALED THE PARTICULARS OF HIS INCOME WHICH ATTRACTS THE PENAL PROVISIONS OF THE ACT. IN THE PRESENT CASE, THE ASSESSEE HIMSLEF TOLD THE ASSESSING OFFICER THAT THERE WAS A SUPPRESSION OF INCOME TO THE EXTENT OF RS. 11,027 . THIS WAS ALSO VERIFIED BY THE ASSESSING OFFICER, AND HENCE THE QUESTION OF THE AU THORITY IN PENAL PROCEEDINGS COMING TO ANY CONCLUSION DIFFERENT FROM THE ONE ARRIVED AT IN THE REASSESSMENT PROCEEDINGS DOES NOT ARISE. THE ABOVE DECISION IS NOT AN AUTHORITY FOR T HE POSITION THAT WHERE THE REASSESSMENT IS NOT CHALLENGED IN APPEAL, THE ORDER AS SUCH CAN BE COLLATERALLY CHALLENGED IN PENALTY PROCEEDINGS. IF THE ASSESSMENT ORDER OR REASSESSMEN T ORDER BECOMES FINAL, THAT IS BINDING ON BOTH THE PARTIES AND NEITHER PARTY CAN SEEK TO R EOPEN IT IN A PENALTY PROCEEDING. THIS CONCLUSION, OF COURSE, DOES NOT AFFECT THE SETTLED POSITION OF LAW THAT THE ASSESSMENT ORDER OR REASSESSMENT ORDER IS NOT CONCLUSIVE IN PENALTY PROCEEDINGS. WE, THEREFORE, HOLD THAT QUESTION NO. 2 HAS TO BE ANSWERED IN FAVOUR OF THE REVENUE. ABOVE CLEARLY SHOWS THAT PENALTY PROCEEDINGS AND AS SESSMENT PROCEEDINGS ARE INDEPENDENT, THEREFORE DURING PENAL TY PROCEEDINGS THE ASSESSMENT PROCEEDINGS CANNOT BE AG ITATED. 14 THE LD. COUNSEL FOR THE ASSESSEE HAD RELIED ON T HE DECISION OF HON'BLE PUNJAB AND HARYANA HIGH COURT IN CASE OF HARIGOPAL SINGH VS. CIT (SUPRA). IN THAT CASE THE ASSESSEE F ILED RETURN OF INCOME ON ESTIMATE BASIS DECLARED INCOME OF RS. 52, 000/-. THE INCOME WAS FINALLY ASSESSED AT RS. 2,07,500/- BY ES TIMATING ASSESSEES SALES AND GROSS PROFITS, THE INCOME WAS REVISED TO RS. 1,50,000/- BY THE TRIBUNAL. AGAINST THIS ADDIT ION PENALTY WAS IMPOSED WHICH WAS DELETED BY THE HON'BLE HIGH COURT BY OBSERVING THAT THIS IS A CASE OF ESTIMATED INCOME, THEREFORE PENALTY CANNOT BE LEVIED. IN THE CASE BEFORE US, T HE ASSESSEE HAD OFFERED A SUM OF RS. 23 LAKHS DURING SEARCH WHI CH HAS NOT BEEN INCLUDED IN THE RETURNED INCOME. SIMILARLY AN OTHER SUM OF RS. 43,25,000/- STATED TO HAVE RECEIVED FROM CUSTOM ERS FOR WHICH NO EVIDENCE WAS GIVEN. EVEN IN PENALTY PROCEEDINGS NO EXPLANATION HAS BEEN GIVEN IN RESPECT OF THESE TWO ITEMS BEFORE THE ASSESSING OFFICER OR CIT(A) OR EVEN BEFORE US. THE ONUS WAS ON THE ASSESSEE TO GIVE SOME EXPLANATION TO PROVE T HAT THIS INCOME IS NOT CONCEALED INCOME. THE HON'BLE SUPREME COURT IN 12 CASE OF KP MADHUSUDANAN VS. CIT (SUPRA) HAS CLEARLY HELD THAT ONCE A SHOW CAUSE NOTICE IS GIVEN THEN ONUS IS ON T HE ASSESSEE TO GIVE EXPLANATION THAT A PARTICULARLY ITEM IS NO T INCOME. THE HEAD NOTE READS AS UNDER: THE EXPLANATION TO SECTION 271(1)(C) IS A PART OF SECTION 271. WHEN THE ASSESSING OFFICER OR THE APPELLATE ASSISTANT CO MMISSIONER ISSUES A NOTICE U/S 271, HE MAKES THE ASSESSEE AWARE THAT THE PROVISIONS THEREOF ARE TO BE USED AGAINST HIM. THESE PROVISIO NS INCLUDE THE EXPLANATION. BY VIRTUE OF THE NOTICE U/S 271 THE A SSESSEE IS PUT TO NOTICE THAT IF HE DOES NOT PROVE, IN THE CIRCUMSTAN CES STATED IN THE EXPLANATION, THAT HIS FAILURE TO RETURN HIS CORRECT INCOME WAS NOT DUE TO FRAUD OR NEGLECT, HE SHALL BE DEEMED TO HAVE CON CEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS THEREOF, AND, CONSEQUENTLY BE LIABLE TO THE PENALTY UNDER TH E SECTION. NO EXPRESS INVOCATION OF THE EXPLANATION TO SECTION 27 1 IN THE NOTICE U/S 271 IS NECESSARY BEFORE THE PROVISIONS OF THE EXPLA NATION ARE APPLIED. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE OPIN ION THAT THE LD. CIT(A) HAS CORRECTLY CONFIRMED THE PENALTY AND ACCORDINGLY WE CONFIRM HIS ORDER. 15 IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.02.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26.02.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/DR