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The Income- Tax Act, 1995
Section 145(3) in The Income- Tax Act, 1995
Cit, Delhi vs Swaran Singh Kanwar on 26 February, 1997
Cit vs Gujarat Mineral Development ... on 30 September, 1997
Section 144 in The Income- Tax Act, 1995
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Dhanpat Rai Sachedeva Memorial ... vs Assessee on 4 April, 2011

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Income Tax Appellate Tribunal - Agra
Rai Wines , Jhansi vs Department Of Income Tax on 16 July, 2008
                       IN THE INCOME TAX APPELLATE TRIBUNAL,
                                  AGRA BENCH, AGRA

              BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND
                      SHRI H.S. SIDHU, JUDICIAL MEMBER

                                       ITA No. 620/Agra/2008
                                        Asstt. Year : 1998-99

A.C.I.T. - 6, Jhansi                          vs.                  M/s. Rai Wines,
                                                                   Ras Bahar Colony,
                                                                   Jhansi.
(Appellant)                                                        (Respondent)

               For Appellant            :     Shri A.K. Sharma, Jr. D.R.
               For Respondent           :     Shri R.C. Tomar, ITP

                                              ORDER

Per P.K. Bansal, A.M. :

This appeal has been filed by the Revenue against the order of CIT(A) dated 16.07.2008 by which the CIT(A) has deleted the penalty imposed on the assessee by the Assessing Officer for filing of the inaccurate particulars in respect of the sales made by the assessee by observing under para 4 of his order as under :

"I have carefully considered the facts of the case, the above submissions of AR and the position of law. There was a difference of opinion as regards the income of the appellant. Since the AO and CIT(A) adopted different estimates in assessing the income of the appellant, therefore, it cannot be said that the appellant had furnished inaccurate particulars of its income or concealed the particulars of his income so as to attract clause (c) of section 271(1) of the Income tax Act. In my opinion, in these circumstances the penalty u/s. 271(1)(c) is not leviable. Therefore, the order imposing penalty u/s. 271(1)(c) is quashed."

2. The brief facts of the case are that the assessee submitted his return of income on 31.10.1998 at an income of Rs.9,93,630/- showing the sale of country liquor at Rs.3,56,12,160/- and foreign liquor at Rs.94,86,564/- total at Rs.4,50,98,724/-. The Assessing Officer asked for 2 evidence in respect of sales. The assessee could not produce the sales vouchers for justifying the sale rate per bulk litre. The Assessing Officer, therefore, rejected the books of accounts and estimated the profit by applying the rate of 5% on the estimated sales of Rs.6,56,00,748/-. In further appeal before the CIT(A), the CIT(A) accepted the India Made Foreign Liquor figure as per books, but so far as the sales of country liquor is concerned, in the absence of non-production of the sales vouchers by the assessee, the sale price of country liquor was worked out @ 30.70 per bulk litre against the rate shown by the assessee @ 28.38 per bulk litre and estimated by the Assessing Officer @ Rs.39.70 per bulk lire. The sales rate has been worked out per bulk litre on the basis of the comparative instances of the earlier year and the sales made by other competitors in the area. The CIT(A) also noted that since all the expenditure incurred by the assessee had duly been accounted for in its books of accounts, the difference in the sales represents the sale consideration received outside the books of account and accordingly, addition to the extent of Rs.20,08,880/- was confirmed. The assessee went in appeal before the ITAT. The Income-tax Appellate Tribunal confirmed the rate at 30.70 per bulk litre by observing as under para 7 of its order :

"Before us the assessee has not been able to bring any evidence contrary to the findings given by the ld. CIT(Apeals) that the bulk sale rate was less than Rs.,30.70 per litre. In the absence of any contrary evidence, the rate adopted by ld. CIT(Appeals) at Rs.30.70 as against 39.70 taken by assessing Officer, is quite reasonable."

3. The Assessing Officer although initiated the penalty proceedings during the course of assessment proceedings, but imposed the penalty on the assessee vide order dated 19.06.2007 for filing the inaccurate particulars of income by the assessee @ 200% of the tax sought to be evaded in the following manner :

3

"Looking to the facts and circumstances as mentioned above I am of the view that the assessee has furnished inaccurate particulars of its income and accordingly, penalty u/s. 271(1)© of the I.T. Act, 1961 is leviable. The minimum penalty leviable U/s. 271(1)(c) of the I.T. Act, 1961 is a sum not less than the tax sought to be evaded and maximum penalty leviable u/s. 271(1)(c) of the I.T. Act, 1961 shall not exceed three time, the amount of tax sought to be evaded. Minimum and maximum penalty leviable u/s. 271(1)(c) works out to Rs.10,18,108/- and Rs.30,54,324/- respectively. After considering the facts and circumstances of the case a penalty of Rs.20,36,220/- is being imposed. Issue notice of demand and challan."

4. The assessee went in appeal before the CIT(A), but the CIT(A) quashed the penalty order by holding in a summary manner that there was a difference of opinion as regards the income of the assessee since the AO and CIT(A) adopted different estimates while determining the income of the assessee. He, therefore, took the view that it cannot be said that the appellant had furnished inaccurate particulars of his income or concealed the particulars of his income so as to attract clause (c) of section 271(1) of the Income-tax Act. The revenue has come in appeal before us.

5. The learned DR vehemently contended that the CIT(A) has not applied his mind to the facts of the case. It is not the case of estimates of the income. The penalty has been imposed for filing inaccurate particulars of the income by way of understatement of sale consideration by the assessee. The onus is on the assessee to prove the sale consideration as recorded in the books of account. The Tribunal has duly confirmed the sale price @ 30.70 per bulk litre. It is not the case where the penalty has been imposed for concealment of particulars of income. The assessee has nowhere discharged his onus by proving the rate of country liquor per bulk litre. Therefore, it is a fit case where penalty must have been confirmed.

4

6. The learned AR, on the other hand, contended that the income was determined by estimation both at the level of AO and the CIT(A) with vast variation as under:

     SALES     COUNTR          INDIA        TOTAL        NET PROFIT         INCOME
                  Y            MADE
               LIQUOR        FOREIGN
                              LIQUOR
AS SHOWN 3,56,12,16          9486564        4509872     3.79%             9,93625
BY       0                                  4           (COMBINED)
ASSESSEE                                                AND        5.17%
                                                        ON        country
                                                        liquor. .
AS             4,98,13,85    157363957      6560074     5%                32,80,037
ESTIMATE       3                            8           COMIBINED
D BY THE
A.O.
ADDITION                                                                    22,86,412
AS PER AO
AS             3,85,21,04    9486564    4800760         NO         RATE     Rs            Enhance
ESTIMATE       0             (ACCEPTD 4                 APPLIED.            2908880       ment in
D BY THE                     AS                         difference     in   +Rs99362      income by
CIT(A)                       SHOWN                      sales of country    5Rs39025      Rs
                             ON SAME                    liquor as per       16differen    1338780
                             SET     OF                 estimated rate of   ce       in   (3902510-
                             FACTS,                     sale(48007604-      estimated     2563730)
                             BOOKS OF                   45098724=2908       sales2908     estimated
                             A/C AND                    880) as shown       880 +Net      by
                             METHOD                     arrived at on       profit of     AOafter
                             OF                         estimate basis      993625        allowing
                             ACCOUNT                    added as profit     shown in      credit for
                             ING.)                      + further profit    return on     deduction
                                                        of Rs 993625 as     account o     u/s 40(b)
                                                        disclosed by the    fcountry
                                                        assessee in the     liquor and
                                                        return of income    IMFL)=To
                                                        both          for   tal
                                                        Country liquor      addition
                                                        and         IMFL    3902516
                                                        added..

The estimated difference in sales was on account of estimated sale rate per bulk litre at different rates both by the AO and by the CIT(A) as under:

5

Purchase of quantity in amount of sale sale rate per Foreign liquor.

    liquor .        bulk litre.                           bulk litre.
As shown          1254757b.l         3,56,12,160       28.38 p.b.l        Rs 9486564
As per AO         1254757            4,98,13,853       39.70 p.b.l.       Rs 15786395
As per CIT(A)     1254757            3,85,21,040       30.70 p.b.l.       Rs9486564


The assessee maintained combined account for the sale of country liquor and foreign liquor. The account for sale of foreign liquor was accepted on the same set of facts as in the case of country liquor but results of country liquor was not accepted on the ground that no sale vouchers are available. Hence the invocation of provisions of sec.145(3) and the rejection of books of accounts on this mere ground was not justified as per ratio laid down in the case of CIT V SADRUDDIN HUSSAIN (2003) ITR677(Raj), wherein it was held that when the assessee had produced relevant books of account but had not produced sales vouchers, the AO was not justified in invoking the provisions of sec.145. The Head notes of the decision in the case of Ashok Kumar & Co. vs. ITO (Asr) 138 Taxman 70 read as under :

"Sec. 145 of the IT Act-Method of accounting -rejection of accounts-1990- 91- The assessee was a liquor dealer. It had furnished audited accounts along with return of income- It had maintained statutory register prescribed Excuse authorities- No defects in account books maintained by the assessee were pointed out - No sales, purchase were found outside the books- Whether The AO could invoke prov. of sec.145 merely on the ground that assessee had not produced certain sale voucher, sale bills and brandwise details of liquor purchase and sold
- HELD -No."

142 Tax man 46-ITAT( per President as 3rd Member) Triveni Pharma Vs ITO - held ...when complete ledger account of purchase and sales was maintained, it could not be said that 6 accounts of the assessee were not subjected to verification. Stock available on any date could be found out by making reference to the ledger account. Therefore the books of accounts could not be rejected on the ground that they were not correct or incomplete or not subjected to verification.

Allahabad High Court - Sahebuddin & Sons Vs CST UP (1976)38STC47(All) Account books - Rejection - Method of accounting -Recording sales by counting cash in till at end of day- whether recognized method - whether account can be rejected on that ground - Held No.

Uma Aero sales (P)Ltd Vs ACIT (ITAT-Delhi Bench)55TTJ386 Accounts-Rejection - Assessee maintaining full and complete accounts which are supported by excise records - No specific defect in accounts pointed out - Rejection of account and addition made by applying higher gross profit rate not justified.

Patna HC MD Umer Vs CIT Bihar, 101 ITR525 Assessee - Liquor contractor- Held that the only two defects found by the ITO for rejecting the book profit were that, in the absence of cash memos, the sales were not verifiable and that certain transaction were noted in lump sum - No finding was recorded by the deptt. authorities as to the unacceptability of method and irregularly of accounts kept by assessee. It is well settled that in absence of such a finding recorded by the authorities, the books of accounts cannot be ignored. 6.1 It was also contended that in the case of assessee no sales or purchases have been found out side the books. The sales are progressive. The quota and contract money (Bid money) was higher by 8.5% i.e. Rs 3,30,75,000 as against 3,04,53,228 of the preceding year. To stand with competition and the fact that the assessee has to lift higher quota and to avoid loss the quota in the month of March had to be sold even at lower rate @ Rs 24 per bulk litre and hence there was slight fall as compared to preceding year. The learned CIT(A) in quantum appeal has accepted the quantity purchased, quantitative sold, with no adverse comments on authenticity of stock or 7 rate of purchase and even the expenses have been accepted in toto. Even the comparable cases as relied upon by the assessee have been accepted by the learned CIT(A) as per Para 4.3(internal page 11 2nd Para Paper Book page52 )in remand proceedings had held as under : "Further, it has also to be kept in view that as compared to the appellant the other persons operating in nearby areas, have shown a lower selling rate of country liquor which ranged between Rs 24-Rs 28 per litre. In this regard it may be mentioned that since in these cases lower rates were communicated by the AR, the AO vide this office letter dated 13.12.2001 was asked to intimate the correctness of these rates after verifying the same. The A.O. has not controverted these rates and, therefore, it is presumed that the rates given by the A.R. for these persons are correct."

6.2 Thus it was stated that the assessee has been able to substantiate the claim of profit disclosed by bringing on record the comparable cases which even according to CIT(A) the AO has not been able to controvert in remand proceedings.(P B Page 52). Even in the penalty proceedings the AO has not brought any adverse material on record except calculating penalty on the basis of income determined.

6.3. The method of working out the profit on estimate basis by the AO at Rs3280037 as per working given in the last Para of AO's order (PB Page 41) has been rejected by the CIT(A) and He has has estimated the profit as per his own working at Rs2908880 and further to it instead of allowing credit for the profit already disclosed in the return added the net profit disclosed at Rs 993625. Thus the income estimated by CIT(A) stood at Rs3902516 (Paper Book Page 54 - internal page 13 Para 4,4) and it gives a rate in the vicinity of 10.24%.for country liquor against 5.17% found by the AO. Thus, it was submitted that it is a case of purely estimation of income 8 at different figures, with different rates and with different method of working out the estimated profit at the level of AO and the ld. CIT(A) in as much as on same set of facts estimating sales of IMFL by AO and accepting the sales by the CIT(A). Reliance is placed on the Delhi Bench of the Tribunal in the case of Nuchem Ltd Vs Dy.CIT (1994)49 TTJ(DEL)177 wherein it was held that when the assessee has disclosed all material facts pertaining to computation of income and same were not found to be false, additions were made on account of difference of opinion, it cannot be said that the assessee has concealed the particulars of income or furnished inaccurate particular thereof. The Division Bench of honorable Delhi High Court in the case of CIT Vs Bacardi Martini India Ltd.(2007)288 ITR 585 (Del) has held that merely because there was difference of opinion between the assessee and the Assessing Officer, it can not be said that the assessee had intention to conceal his income. In the case of the assessee the addition has been sustained merely on the basis of an opinion. There is thus a difference of opinion on the basis of which addition has been sustained. Penalty, in such circumstances, is not justified. For this reliance has been placed on the following decisions:

     (i)     CIT Vs Prem Das (2001)248 ITR 234(P&H)
     (ii)    Durga Kamal Rice Mills Vs CIT (2004)265 ITR25 (Cal)

(iii) CIT Vs Harshvardhan Chemicals & Mineral Ltd (2003) 259 ITR212(Raj) Mere fact that the addition has been confirmed by the honorable Tribunal does not justify levy of penalty. For this, reliance has been placed on the following decisions:

(i) CIT Vs Inden Bislers (1999)240 ITR943 (mad)

(ii) CIT vs Bharat Minerals Sales Corpn.(2002)

(iii)253 ITR 419 (Cal)IT Vs S. Sankaran (2002)175 CTR(Mad)62.

9

6.4. Relying upon the decision of the Calcutta High in the case of CIT Vs Bimal Kumar Damani (2003)(2003)261 ITR87(Cal) and Durga Kamal Rice Mills vs CIT(Supra) it was submitted that the observation of the honorable Tribunal in quantum proceedings cannot be taken conclusive finding for the purpose of levy of penalty for the concealment. 6.5, Expln.1 to s.271(1)(c) casts a duty on the AO to first record reasons that there has been concealment of income and then seek explanation of the assessee and thereafter penalty can be imposed only if any amount is found to be concealed or explanation found to be false. The AO has failed to record any such finding in the assessment order. Reliance is placed on the decision of honorable Supreme Court in the case of KC Builders Vs CIT (2004)265 ITR 562 (SC). There has been no intention to conceal the income or furnish inaccurate particulars of income and accordingly penalty, in this case was not warranted.

6.6 The case referred by the CIT(A) while making estimate of sales of honorable Supreme Court - Commissioner of sales Tax Madhya Pradesh Vs HM Esufali HM Abdulali, is irrelevant because the text of that judgement - "Best judgment assessment - Principles -sales tax - escaped turnover - whether best judgment assessment can be made - determination of sales for 19 days not entered in account books- whether can form basis for estimating escaped turnover for whole year- "

6.7 As there was no sales of 19 days or for any other period of days were found unrecorded, the said ratio is not applicable to the case of the assessee. A conspectus of the Explanation makes it clear that the statute visualized the assessment proceedings and penalty proceedings to be 10 wholly distinct and independent of each other. In essence, the Explanation is a rule of evidence. presumption which are rebuttable in nature are available to be drawn. The initial burden of discharging onus of rebuttal is on the assessee which he has discharged by bringing on record the comparable cases. The trading results are supported by the Audited Books of accounts. No purchase or sales having been found unrecorded, there being no dispute about the quantity purchased and sold. The appellant in the penalty proceedings having further explained before the AO:

i) Quantitative accounts are maintained and details are mentioned in the audit report.

ii) Accounts are audited by a Chartered accountant supported by audit report u/s 44AB.

iii)    Purchases are fully verifiable.
iv)     Duty paid, permit fee, sealing charges paid to the Govt is verifiable. Sales details are also
        available.
v)      License money paid is for country liquor and IMFL .As per terms of the contract and in

the case of short lifting of goods as per monthly target than the assessee has to deposit/pay the difference amount on account of short lifting of he goods.

vi) In AY 98-99 in the year under assessment there is steep increase in minimum guarantee leaving less margin to the profit in this year as compared to the preceding year 97-98.

vii) The assessee maintained cash book, ledger with day to day balance sheet, details of expenses etc.

viii) Sec.145(3) not applicable because:

ix)     Day to day stock position is maintained./
x)      Sales can be verified by sales man through rates prevailing at that time and their

statement of stock. The sale proceeds are collected from the sales man on the basis of quantity of liquor sold and recorded in the books of accounts which have been subjected to audit. The sales are subjected to close monitoring and supervision of excise Authorities.

11

Thus there was no failure to offer an Explanation on the part of the assessee and explanation offered was substantiated with relevant records and material. Explanation 1 comes into operation when, in respect of any facts material to the computation of total income of any person, there is failure to offer any explanation or an explanation is offered which is found to be false by the AO or the appellate authority, or an explanation is offered which is not substantiated. In such a case the amount added or disallowed in computing the total income is deemed to represent the income in respect of which particulars have been concealed. But in assessee's case there is neither failure to offer any explanation or the explanation offered by him is found to be false by the AO rather on the other hand the learned CIT(A) in penalty proceedings, having been satisfied with the explanation furnished by the appellant and after considering all the factual and legal position has cancelled the penalty and against the cancellation of penalty no material has been placed by the revenue before the honorable ITAT.

6.8 Mere non acceptance of the explanation offered by the assessee can not form a basis for the satisfaction of the AO to the effect that the assessee has concealed the particulars of his income or furnished inaccurate particulars of his income. The AO must have some definite evidence to refuse to assesee's claim or evidence or explanation. It was further submitted that Their lordship of Supreme Court in Jeevan Lal Shah's case (1994) 205 ITR 244 has held that the presumption is not absolute, it is rebuttable. Still further the assessee was held entitled to prove that the failure to return the correct income did not arise from any fraud or any gross or willful neglect on his part. In the case of appellant the assessee had not only given a plausible explanation but also that it had committed no fraud or willful neglect. The assessee's case does not fall within the mischief of sec.271(1)(c).

12

6.9 Reliance was also placed on the honorable Punjab and Haryana High Court in the case of CIT Vs Ajaib Singh & CO 253 ITR 630 where it has been held that the "addition to income based on estimate and disallowance of exp - Tribunal justified in canceling penalty. Income tax Act.1961 ss.260A, 271(1)(c). Disallowance of an expense per se cannot mean that the assessee furnished incorrect particulars of its income. Concealment involves penal action. It has to be proved as a conscious act. The essential pre condition for invoking Explanation 1 to section 271(1)© of the Income tax Act 1961is that the assessee "fails to offer an explanation or offers an explanation which is found by the AO or the Commissioner (Appeals) to be false" It is only in such a situation that the Assessing Officer can invoke the Explanation to section 271(1)(c). Since in the case of appellant the addition is found to have been sustained on estimate basis, and the assessee had not only given a debatable explanation, but also that it had committed no fraud or willful neglect and hence the penalty was not leviable which has been rightly deleted by the CIT(A).

6.10 Now coming to Part (B) of the Explanation, the essence is that when the assessee is able to offer a reasonable explanation based on some evidence, the Income tax Officer cannot invoke part (B) of the Explanation unless he has given a finding based on some contradictory evidence to disapprove that explanation offered by the assessee which the assessee is not able to substantiate and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him. Since the assessee has disclosed all the relevant material facts for the purpose of computation of total income, the assessee has offered explanation in this regard which was not found false by the AO. 13 The explanation of the assessee regarding the income disclosed is supported by audited books of accounts, supported by the Audit report u/s 44 AB and is bona fide. The Revenue did not dispute that the parallel cases sited by the assessee as have been found no fault with by the CIT(A) as per his specific observation and finding given in para 4.4. (Paper Book page 52 2nd para) as discussed in preceding paragraphs also.

6.11 The honorable Rajasthan High Court in the case of SHIV LAL TAK VS CIT (2001)251 ITR 373,379-80(RAJ) has held where in respect of any amount added or disallowed and any explanation is offered by such persons which is not accepted but such explanation is bona fide and all the facts relating to the same and material to the computation of total income have been disclosed by him, the Explanation shall not apply.

6.12 The honorable Gujarat High Court in the case of National Textiles Vs CIT(2001) 249 ITR 125(Guj) has held that until and unless the explanation is found to be false or malafide, the mischief of sec.271(1)© cannot be attracted. Where two views are possible, no penalty can be imposed is a principle that has been enunciated in National Textiles (Supra) 6.13 In assessee's case he had furnished full particulars of purchase and sales and supported by quantitative tally with complete details of expenses for the Country liquor and IMFL. On the same set of facts the sales and results disclosed for IMFL have been accepted and the results of country liquor have not been accepted with undisputed appreciation of fact that the expenses on country liquor and purchases there of with quantitative details are found no fault with and rather 14 estimating different sale rates both at the level of AO and CIT(A) and working out different estimated income on different method adopted by the AO and the CIT(A). Comparable cases sited by the assessee had been accepted by the CIT(A) in appeal against quantum assessment after afforded opportunity to the AO in remand proceedings.(PB Page 52). 6.14 In CIT Vs PK Narayanan(1999)238 ITR 905(Ker) it was held that unless the amount is owed by the assessee and there is a conclusive finding to that effect is not hit by Explanation 1 to sec.271(1)(c).

6.15 The ITAT (Mumbai Bench) in the case of MIMOS INVESTMENT CO P LTD VS ITO reported in(2010) 6 DTR (Tri) 789 has vide para 20 held - When the assessee has furnished all the material facts for the purpose of computation of total income, the AO is duty bound to calculate total income in accordance with law which may be different from the total income calculated by the assessee. Mere fact that the AO while discharging his duty in recalculation the total income in accordance with law, which is not the same as calculated by the assessee, it cannot be held that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income or there is deemed concealment of particulars and had cancelled the penalty imposed by the AO.

6.16 Assessment proceedings and penalty proceedings are distinct and separate proceedings. Merely because addition has been made and sustained in appeal does not by itself, justify imposition of penalty. Reliance in this regard is further placed on the judgment of honorable 15 Punjab & Haryana High Court (Full Bench) in the case of Vishwa karma Industries Vs CIT 135 ITR 652 (P&H FB). While addition can be made on the ground that the explanation given by the assessee was not found to be satisfactory, but for the purpose of levy of penalty under sec 271(1)©, the AO still requires to demonstrate that the conduct of the assessee was dishonest or contumacious. Until there is material or evidence to show that the assessee had concealed its income or furnished inaccurate particulars there, the AO will not be justified for levying penalty under sec.271(1)(c).

6.17 The finding recorded by the AO in the assessment proceedings cannot be regarded as conclusive in penalty proceedings. This is the law enunciated by the honorable Supreme Court in the case of Anantharam Veerasinghaiah and Co. Vs CIT(1980)123 ITR 457. 6.18 When all the facts were placed before the AO and the appellate authorities, by the assessee itself, by no stretch of imagination it can be said that the assessee had concealed the same. Divergent views amongst the Departmental authorities i.e. by the AO and the learned CIT(A) in quantum proceedings taken by the as is apparent from the different method of calculation of income that too by estimate indicate that it would be unsafe to infer that the assessee was guilty of concealment of income or furnishing of inaccurate particulars there of. In the case of the assessee it cannot be said that the assessee withheld any relevant information regarding his income expenditure and receipts from the Assessing Officer. It bears repetition that the figures arrived at by the Assessing Officer pertaining to the Purchase, sales , expenses, quantitative details of purchase and sales wa a figure disclosed by the assessee himself 16 6.19 With regard to the provisions of sec.271(1)(c) of the Act, pertaining to penalty, the honorable Supreme Court has authoritatively laid down that making of a claim by the assessee which is not sustainable will not amount to furnishing inaccurate particulars . In CIT Vs Reliance Petroproducts Pvt. Ltd (2010) 322 ITR 158 (SC), the court held as follows (page 163):

: "As per law Lexicon, the meaning of the word " particular" is a detail or details (in plural sense),; the details of a claim, or the separate item of an account, Therefore, the word 'particular' used in section 271(1)© would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars."

6.20 The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provisions, the penalty provisions cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars.

6.21 In the case of CIT Vs Bacardi Martini India Ltd(2007) 288 ITR 585(Delhi), division bench of the court held that merely because there was difference of opinion between the assessee and the Assessing Officer, it cannot be said that the assessee had intention to conceal his income. 6.22 The case of the assessee is not a case where the assessee had not been able to explain any expenditure or had failed to give any details. The net profit by estimate was applied because of difference of opinion between the assessee, AO and even there was difference of opinion 17 between the AO and the CIT(A). Since there was full disclosure of all the relevant material, it cannot be said that the conduct of the assessee attracted provisions of section 271(1)(c) of the Act.Expln.1(A) is not attracted. Assessee having disclosed all the material facts, onus placed upon it under Expln (B) also stood discharged. The Income was determined on the basis of mere estimate and therefore penalty under section 271(1)(c) read with Explanation 1 was not justified and the learned CIT(A) had rightly deleted the penalty.

6.23 The honorable High Court of Punjab and Haryana in the case of CIT vs Modi Industrial Corporation reported in (2010)34 DTR (P&H)158 had held:

"PENALTY UNDER SECTION 271(1)(c) -CONCEALMENT- ADDITIONS BASED ON ESTIMATE - AO MADE ADDITION - IN APPEAL, TRIBUNAL APPLIED FLAT RATE OF 10 PRCENT FOR WORKING OUT UNACCOUNTED PROFITS - THEREFORE, ASSESSEE'S ASSESSMENT HAVING BEEN MADE ON ESTIMATE BASIS, PENALTY UNDER SECTION 271(1)(c) IS NOT IMPOSABLE VIS A VIS THE ADDITION MADE TO THE INCOME-

CIT Vs Devi Dayal Aluminium Industries(P) Ltd (1987)171 ITR683(ALL) In this case, the additions were made and the same were upheld by the Tribunal. The Tribunal deleted the penalty on the ground that the rejection of an explanation of the assessee did not render explanation false. On reference the honorable Allahabad High Court upheld the order of the Tribunal.

6.24 In the following cases where the income was estimated by rejecting the book results, penalty was imposed u/s 271(1)(c) on the ground that the addition was made on the basis of 18 estimate. The Tribunal on the ground that additions have been made on estimate basis, cancelled the penalty which was upheld by the honorable High Courts:

(i)      CIT vs Ajaib Singh & Co.253 ITR 630(Punj.& Haryana )
(ii)     JCIT vs VXL (India)Lrtd.(ITAT-Amritsar) (2005)94 TTJ(Asr)513
(iii)    HP State Forest Corp.Ltd vs DCIT (2005)93 ITD 442(Chd,)
(iv)     CIT Vs Modi Industrial Corp. (2010)34 DTR(P&H)158(Punj & Hayana High Court)
(v)      CIT Vs. Devi DayalAluminium Industries (P Ltd.(1987) 171ITR683(All.)
(vi)     CIT Vs Ravail Singh & Co.(2002)254 ITR 191(P&H)
(vii)    CIT Vs Dhillon Rice Mills (2002)256 ITR 447 (P&H)
(viii)   CIT Vs Bharat Rice Mills (2001)250 ITR 584(P&H)
(ix)     ITO Vs Nandi Steel Works (P Ltd.(1997)63 ITD364 (Bang)
(x)      Tribunal Indore Bench in the case of Laxmi Dal Mills Vs ITO(1995)53 TTJ(Ind)425

In view of aforesaid facts and legal position the penalty was rightly cancelled by the C.I.T. (A) and it was requested that the appeal filed by the revenue may kindly be directed to be cancelled.

7. We have carefully considered the rival submissions, perused the material on record along with the orders of the tax authorities below. We have also gone through the case laws cited before us. In this case the assessing officer has imposed the penalty for filing the inaccurate particulars of income not for concealing the particulars of income as has been vehemently argued by the learned AR. Section 271(1)(c ) reads as under:

"271.(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 -
                (a)      .....
                (b)      .....
         (c)    has concealed the particulars of his income or furnished inaccurate
         particulars of such income, or
                (d)      .....
         he may direct that such person shall pay by way of penalty, -

Explanation 1- Where in respect of any facts material to the computation of the total income of any person under this Act, -
19
(A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false or (B) such person offers an explanation which he is not able to substantiate and [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 total income have been disclosed by him], then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section be deemed to represent the income in respect of which particulars have been concealed."

From the perusal of the aforesaid section, it is apparent that penalty u/s 271(1)(c ) is leviable if the A.O. is satisfied in the course of any proceedings under this Act that any person has concealed the particulars of his income or furnished inaccurate particulars of the income. The penalty proceedings and the assessment proceedings, both are different. The penalty under this section can be levied on two charges i.e. for concealment of particulars of income or for furnishing of inaccurate particulars of income. In view of provisions of section 271(1)(c), we are of the view that there must be clear finding about the charge of the penalty. It is incumbent on the A.O. or the Officer imposing the penalty to state whether the penalty was being levied for concealment of particulars of income or for furnishing of inaccurate particulars of income. In the absence of such a finding, an order passed by the concerned authority imposing penalty under section 271(1)(c) will be void. The word "conceal" as per Webster Dictionary means to hide, with draw or remove from observation, cover or keep away from sight, to keep secret, to avoid disclosing or divulging. That means non-disclosure of particulars of income, on the other hand, where the particulars are disclosed but such disclosure is not correct and true or accurate, it would amount to furnishing of inaccurate particulars of income. For example, in a case of a businessman even the particular transaction of sale is not shown in the books it would amount to 20 concealment of particulars of income while the sale is shown but at lesser value, it would amount to furnishing of inaccurate particulars of income. It is pertinent to note that thrust of levy is upon the particulars of income which are either concealed or furnished inaccurately by the assessee. The expression particulars refer to the facts, details, specific or the information about someone or something. Thus, the details or information about the income would deal with factual details of the income and cannot be understood to areas which are subjective such as status of taxability of an income, admissibility of deduction and interpretation of law. The Hon'ble Supreme Court in the decision of CIT vs. Reliance Petroproducts Pvt. Ltd., 322 ITR 158 (SC) as relied on by the Ld. AR has laid down that as per law lexicon the meaning of the word "particulars" is detail or details (in plural sense), the details of a claim or supporting items of an account. Thus, it was held that the meaning of the word "particulars" used in section 271(1)(c) would embrace the details of the claim made. In the case of the assessee, it is a fact that information given for the sale price was found to be incorrect or inaccurate and ultimately upheld by the ITAT. The decision of Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. (supra) in which the Hon'ble Supreme Court has held as under in our opinion will not be applicable in the case of the assessee :-

"A glance at the provisions of section 271(1)(c) of the Income tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word "particulars" used in section 271(1)© would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the 21 assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous.
Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars."

8. We may point out at this stage that the exaplanation-1 to section 271(1)(c) is applicable only for concealment of particulars of income. It cannot be applied where charge against the assessee is for furnishing of inaccurate particulars of income. Where the charge against the assessee is concealment of particulars of income, the onus is on the A.O. to establish either that the assessee has not disclosed the particulars of income under the main provisions or the case of the assessee falls within the Explanation given under section 271(1)(c). Explanation 1 to Section 271(1)(c) states that the amount added or disallowed in computing the total income of the assessee shall be deemed to be the income in respect of which particulars have been concealed. This deeming provision is not absolute one but is rebut table one. It only shifts the onus on the assessee. Explanation 1 refers to the two situations in which presumption of the concealment of the particulars of income is deemed. The first situation is where the assessee in respect of any fact material to the computation of his total income fails to offer an explanation or offers an explanation, which is found by the AO or the Commissioner to be false. The second situation is where the assessee in respect of any facts material to the computation of his total income offers an explanation, which the assessee is not able to substantiate and also fails to prove that such explanation was bonafide one and that all the facts relating to the computation of total income have been disclosed by him. The presumption available under explanation to section 271(1)©, 22 cannot be drawn unless the case of the assessee falls under either of the clauses (a) or (b). This explanation, therefore, does not and cannot apply to the case where addition/disallowance has been made by rejection of legal claim made by the A.O. Bonafide of legal claim is not the subject matter of the Exaplanation-1. Therefore, Hon'ble Supreme Court in the case of Reliance Petroproducts (supra) has held that mere rejection of legal claim would not invite penalty. This would also apply where the charge against the assessee is concealment of particulars of income. If we look at the provisions of section 271(1)(c) and Explanation-1 from a different angle, the A.O. is bound to bring on record specific charge against the assessee whether the assessee has concealed the particulars of income or furnished inaccurate particulars of income. In the case of concealment of particulars of income, initial onus will get shifted on the assessee to prove that he has not concealed the particulars of income due to the applicability of explanation I. While, in the case of furnishing of inaccurate particulars of income, the onus remains on the Revenue to prove that the assessee has furnished inaccurate particulars of income.

9. We have gone through the order of Assessing Officer in this case and we noted that in this case, the Assessing Officer has not invoked Explanation 1 to section 271(1)(c). The penalty u/s. 271(1)(c) of the Income-tax Act has been levied for furnishing inaccurate particulars of income in the following manner :

"Looking to the facts and circumstances as mentioned above I am of the view that the assessee has furnished inaccurate particulars of its income and accordingly, penalty u/s. 271(1)(c) of the I.T. Act, 1961 is leviable. The minimum penalty leviable u/s. 271(1)(c) of the I.T. Act, 1961 is a sum not less than the tax sought to be evaded and maximum penalty leviable u/s. 271(1)(c) of the I.T. Act, 1961 shall not exceed three time, the amount of tax sought to be evaded. Minimum and maximum penalty leviable u/s. 271(1)(c) is works out to Rs.10,18,108/- and Rs.30,54,324/- respectively. After considering the facts and circumstances of the case, a penalty of Rs.20,36,220/- is being impugned. Issue notice of demand and challan."
23

10. Now, the question arises whether the Revenue has discharged its burden of proving that the assessee had submitted inaccurate particulars of income or not. The Assessing Officer had asked the assessee during the course of assessment proceedings about the rate per bulk litre at which the liquor was sold but the assessee did not submit the evidence in form of sales memo etc. to prove the rate at which the country liquor was sold. The Assessing Officer estimated the rate @ 39.7 per bulk litre against average sale rate worked out as per record of the assessee at the rate of 23.36 per bulk litre. The Assessing Officer in this regard relied at the sale price admitted by M/s. Ramesh Chand Virendra Kumar Rai. When the assessee went in appeal before the CIT(A), the CIT(A) compared the sales effected by the assessee in the immediate preceding year and the sale rate was admitted at the rate of 31.30 per bulk litre. Against this, the CIT(A) adopted the sale rate at the rate of 30.70 per bulk litre by allowing the rebate of 60 paisa per bulk litre. When the matter went before the Tribunal, the Tribunal has given clear cut finding that the assessee had not been able to bring any evidence contrary to the finding given by the CIT(A) that the bulk sale rate was less than Rs.30.70 per bulk litre. The Tribunal in the absence of any contrary evidence, confirmed the rate adopted by the learned CIT(A) in the following manner :

"7. We have heard both the parties. There is no dispute that assessee has not maintained sale vouchers in respect of sales affected by the assessee. Therefore, actual sales cannot be determined. When the sales are not determinable, the actual profit cannot be determined from the sales shown by the assessee. Accordingly, the provisions of section 145(3) will be applicable. Under section 145(3) where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee. or where the method of accounting provided in sub-section (1) or accounting standard as notified under sub-section (2), have not been regularly followed by assessee, the Assessing Officer may make an assessment in the manner provided in section 144. In the case before us, the Assessing Officer has estimated the sales based on the sales per litre admitted by other persons engaged in similar business in the same locality. Therefore, Assessing Officer has followed the procedure for making an assessment In the manner provided in section 144 of the Act. The assessee was 24 duty bound to maintain the sale bills in order to escape the rigors of section 145(3) of the Act. In the absence of actual sales it is impossible to determine the correct profits earned by the assessee. On appeal, ld. CIT (Appeals) has compared the sales affected by assessee in the immediate preceding year. The sale rate was admitted at Rs.31.30 per litre. Against this, ld. CIT(Appeals) has adopted the sale rate at Rs.30.70 by allowing the rebate of 60 paisa per litre for certain variations due to increase in quota and contract money. Before us, the assessee has not been able to bring any evidence contrary to the findings given by ld. CIT(Appeals) that the bulk sale rate was less than Rs.30.70 per litre. In the absence of any contrary evidence, the rate adopted by ld. CIT(Appeals) at Rs.30.70 as against 39.70 taken by assessing officer, is quite reasonable."

11. No doubt, penalty proceedings and the assessment proceedings both are different and if the assessee could not adduce the evidence during the course of assessment proceedings, he should have adduced the evidence during the course of the penalty proceedings. But in the case before us, the assessee, again could not adduce any evidence which may prove that the assessee had sold the liquor at a rate less than Rs.30.70 per bulk litre. The learned AR, even though has argued is case in detail and even stated that the proviso to section 145 should not be taken into account knowing fully that the assessee is against the order of penalty imposed u/s. 271(1)(c). Thus, the Tribunal cannot look into the merits of the case about the rejection of the books and the additions confirmed by this Tribunal vide order dated 29.12.2006. The Tribunal cannot review the order passed by it. No such power is given to this Tribunal either u/s. 254 or u/s. 254(2). The jurisdiction of this Tribunal are limited to the grounds of appeal before the Tribunal. We, therefore, reject the contention of the learned AR so far as it relates to that the provisions of section 145(3) were not applicable in the case of the assessee. The case law relied upon in this regard are not required to be discussed by us, as we do not have any jurisdiction to adjudicate this issue while hearing the appeal in respect of the order passed u/s. 271(1)(c). 25

12. The learned AR has also argued before us that the additions have wrongly been sustained by the Tribunal. This issue also does not arise before us. We, therefore, reject this contention also. The learned AR has raised the contention that there is a difference of opinion between the Assessing Officer and the Appellate Authority so far as the application of rate per bulk litre is concerned. In this regard, he relied on the decision Delhi Bench of Tribunal in the case of Nuchem Ltd. vs. DCIT 49 TTJ (Del.)177, of Delhi High Court in the case of CIT vs. Bacardi Martini India Ltd. (2007) 288 ITR 585 (Del.), of Punjab and Haryana High Court in the case of CIT vs. Prem Das 248 ITR 234, Durga Kamal Rice Mills vs. CIT 265 ITR 25 (Cal.), CIT vs. Harshvardhan Chemicals & Mineral Ltd. 259 ITR 212 (Raj.). These decisions in our opinion will not assist the assessee. In the case of the assessee, there is no difference of opinion between the same quasi judicial authorities. If this contention of the assessee is accepted then each and every case where the assessee gets the relief or addition gets reduced by appellate authority, according to the AR, no penalty will be leviable. Such interpretation in our opinion is not a valid interpretation. We have gone through these decisions and we find that these decisions are not applicable to the facts of the case before us. The decision of the Delhi High Court in the case of CIT vs. Bacardi Martini India Ltd. (supra) relates to the cases where the penalty has been levied for the concealment of income not for filing of inaccurate particulars of income. In the case of Durga Kam Rice Mills vs. CIT (supra), the Hon'ble Punjab & Haryana High Court has held that the Assessing Officer should give independent finding in the penalty proceedings. Imposition of the penalty on the basis of quantum proceedings cannot be made. In this case, it was further held that where two views are possible and no clear and definite inference is drawn, penalty cannot be imposed for concealment of income. In this case, penalty was imposed by invoking explanation 1 26 to section 271(1)(c). This decision will also not assist the assessee, as in the case of assessee penalty has not been imposed by invoking the Explanation 1 to section 271(1)(c).

13. The decision in the case of CIT vs. Harshvardhan Chemicals & Mineral Ltd. (supra) also relates to a case where the penalty has been imposed for concealment of the particulars of income in terms of Explanation to section 271(1)(c). Therefore, this decision will also not apply to the case of the assessee. In the case of CIT vs. Prem Dass (supra), penalty was imposed for the concealment of income not for filing of inaccurate particulars of income. Therefore, this decision will also not apply to the facts of the case of the assessee.

14. In the cases of CIT vs. Inden Bislers 240 ITR 943 (Mad.), CIT vs. Bharat Minerals Sales Corpn., 253 ITR419 (Cal.), CIT vs. Bimal Kumar Damani, 261 ITR 87 (Cal.), as relied upon by the assessee, also the penalties were levied for concealment of particulars of income. In the preceding paragraph we have also held that twin charges, i.e., concealment of the particulars of income and filing of inaccurate particulars of income are different. The penalty in the impugned case has not been imposed for the concealment of the particulars of the income, but for filing the inaccurate particulars of income, as the assessee has shown the bulk sale of liquor at a lower price.

15. We have also gone through the decision in the case of K.C. Builders vs. CIT, 265 ITR 562 (SC). In this case it was held that where the additions made in the assessment order on the basis of which penalty for concealment is levied, are deleted, there remains no basis at all for levying penalty for concealment and, therefore, in such a case, no penalty can survive and the 27 penalty is liable to be cancelled. This decision also, in our opinion, will not apply to the facts of the case of the assessee as in the case of assessee, the Tribunal has not deleted the addition but the sale rate taken by the CIT(A) was duly confirmed by the Tribunal and, therefore, the penalty was levied for filing the inaccurate particulars of the income.

16. The reliance on the decision of Hon'ble Supreme Court in the case of Jeevan Lal Shah, 205 ITR 244 is also, in our opinion, out of context, as in the case before us, the Assessing Officer has not invoked the presumption as is available under Explanation to section 271(1)(c). This decision will also not assist the assessee.

17. The decision of Hon'ble Punjab & Haryana High Court in the case of CIT vs. Ajaib Singh & Co. 253 ITR 630, of Rajasthan High Court in the case of Shiv Lal Tak vs. CIT, 251 ITR 373, Gujrat High Court in the case of National Textiles vs. CIT, 249 ITR 125 (Guj) as have been heavily relied upon by the learned AR, are also not applicable to the facts of the case before us, as in these cases, the penalty has been imposed u/s. 271(1)(c) by the Assessing Officer for concealment of particulars of income by invoking Explanation to section 271(1)(c), but at the cost of repetition, we may point out that in the case of the assessee, the Assessing Officer has levied the penalty for filing the inaccurate particulars of income and not for concealment of particulars of income.

18. The other decision, as relied on by the ld. AR in the case of CIT vs. P.K. Narayanan 238 ITR 905 and Mimos Investment Co. P. Ltd. Vs. ITO, 6 DTR (Trib) 789 will also not assist the 28 assessee in the similar manner as in the case of the assessee, penalty has been imposed for filing the inaccurate particulars of the income.

19. The decision of Hon'ble Punjab and Haryana High Court in the case of Vishwakarma Industries vs. CIT, 135 ITR 652 also relate to the applicability of the Explanation of section 271(1)(c). Similarly, the other decisions relied on by the learned AR, namely CIT vs. Modi Industrial Corpn., 34 DTR (P&H) 158, CIT vs. Devi Dayal Aluminium Industries (P) Ltd., 171 ITR 683 (All.), JCIT vs. VXL (India) Ltd. (ITAT Amritsar), 94 TTJ 513, H.P. State Forest Corp. Ltd. vs. DCIT93 ITR 442 (Chd.), CIT vs. Ravail Singh & Co., 254 ITR 191 (P&H), CIT vs. Dhillon rice Mills, 256 ITR 447 (P&H), CIT vs. Bharat Rice Mills, 250 ITR 584 (P&H), ITO vs. Nandi Steel Works (P) Ltd., 63 ITD(Bang) and decision of ITAT Indore in the case of Laxmi Dal Mills vs. ITO, 53 TTJ (Ind.) 425, are also no applicable in the case of the assessee.

20. We have also gone through the decision of Delhi High Court in the case of CIT vs. IFCI Ltd., 328 ITR 611. This decision will also not assist the assessee. In this case, the assessee has claimed the deduction of loss. The details in respect of the claim were duly furnished by the assessee. The claim of assessee ws rejected. Under these facts, the Hon'ble High Court held that the cancellation of penalty is valid. We may point out that in the case of assessee, the assessee has not furnished the details of the rate at which the bulk liquor sales per litre was made neither during the course of assessment proceedings before the Assessing Officer, CIT(A) or before the Tribunal nor now before us during the course of penalty proceedings. The decision, so relied, in our opinion, will not assist the assessee.

29

21. We may point out that the Hon'ble Jurisdictional High Court in the case of Raj Kumar Chaurasia vs. CIT, 288 ITR 329, although while dealing with the penalty imposed for concealment of income by invoking Explanation to section 271(1)(c), has held that the finding in quantum proceedings is relevant for imposing the penalty u/s. 271(1)(c). In this case it was held as under :

"After the amendment made in section 271 of the Income-tax Act, 1961, in the year 1964 in certain circumstances, the onus lies upon the assessee to prove that the difference between the assessed income and the returned income has not been concealed by him nor has there been any fraud or gross or willful neglect on his part to give correct particulars of his income.
The assessee's father was running a shop selling cigarettes and cool drinks. Subsequently the assessee was assessed in respect of the income from the shop. He got married in 1972. He filed his returns for the assessment years 1975- 76 and 1976-77 in July, 1976. More or less simultaneously a return of income was filed in his wife's name also declaring income from sale of cool drinks. On or about September 15, 1976, the assessee filed his revised returns for the assessment years 1974-75, 1975-76 and 1976-77 showing income at Rs. 21,546, Rs. 45,690 and Rs. 15,500 respectively. The revised returns included income from unexplained investment in the bank account and fixed deposits. The assessee's plea in respect of these assessment years was that he had stopped doing cool drinks business and that the said business was being done by his wife and as such the income from the cool drinks business was not included in his return and that it was part of the returns filed in the name of his wife. As regards unexplained investments, he pleaded that they represented funds left by his late father but of which he had no evidence and so they were offered for assessment. The Income- tax Officer examined the various claims of the assessee and found that they could not be believed. He made additions to the income and also levied penalties. The Tribunal found that the income-tax authority in the quantum appeal had held that the cool drinks business which was alleged to be carried on in the name of the assessee's wife actually belonged to him. The Tribunal confirmed the order of penalty. On a reference :
Held,_ that it was not in dispute that the cool drinks business carried on by the assessee in the name of his wife had been held by the Tribunal, which was the last fact finding authority, to be the business carried on by the assessee and the income earned therefrom had been included in his income. The investments introduced by the assessee remained unexplained by the assessee and were offered by the assessee himself to be added in his income. In the penalty proceeding, apart from the explanation which was given by the assessee in the assessment proceeding, neither any fresh material nor any evidence had been 30 placed before the authorities nor any other plausible explanation had been offered to show that there was no gross or willful neglect on his part nor was there any fraud in not disclosing the correct income. In the circumstances, the findings recorded by the authorities in the quantum proceedings became relevant and if the authorities had relied upon the finding recorded in the assessment proceeding, it could not be said that the penalty proceedings were vitiated. It was admitted that the Explanation as inserted at the end of sub-section (1) of section 271 of the Act was applicable. The assessee had not given any fresh explanation except what had been stated by him in the quantum proceeding. The explanation had been proved to be false. The imposition of penalty was therefore valid. "

22. We are of the view that the decision of jurisdictional High Court is equally applicable in the case of the assessee. The bulk liquor sale rate per litre at Rs.30.70 has been confirmed by the Tribunal against which the assessee has shown the average bulk rate of Rs.28.38 which clearly shows that the assessee has furnished inaccurate particulars of income. The CIT(A) in our opinion was not correct in law in deleting the penalty in succinct manner by observing as under without looking into the penalty order and the order of this Tribunal merely on the basis that there is a difference of opinion as regards the income of the assessee while, in fact, this is not the case of difference of opinion, but a case of filing of inaccurate particulars of income by showing rate of country liquor at Rs.28.38 per bulk litre :

"I have considered the facts of the case, the above submissions of AR and the position of law. There was a difference of opinion as regards the income of the appellant. Since the AO and CIT(A) adopted different estimates in assessing the income of the appellant, therefore, it cannot be said that the appellant had furnished inaccurate particulars of its income or concealed the particulars of his income so as to attract clause (c) of section 271(1) of the Income-tax Act. In my opinion, in these circumstances the penalty u/s. 271(1)(c) is not leviable. Therefore, the order imposing penalty u/s. 271(1)(c) is quashed."

Accordingly we set aside the order of CIT(A). But keeping in view the facts and circumstances of the case, we are of the view that the Assessing Officer should have imposed the minimum penalty. The minimum penalty for the tax sought to be evaded was Rs.10,18,108/-. We 31 ITA No. 620/Agra/2008 accordingly direct the Assessing Officer to impose penalty of Rs.10,18,108/-.

23. In the result, the appeal of the Revenue stands partly allowed.

Order pronounced in the open court on 25.03.11.

                  Sd/-                                                         Sd/-
            (H.S. SIDHU)                                                (P.K. BANSAL)
           Judicial Member                                             Accountant Member

Dated: 25th March, 2011
*aks/-

Copy of the order forwarded to :

      1.      Appellant
      2.      Respondent
      3.      CIT(A)                                                    By order
      4.      CIT, concerned
      5.      DR, ITAT, Agra
      6.      Guard file                                                Assistant Registrar

                                                 True copy