COMMISSIONER OF INCOME TAX III Vs. UDAYVEER SINGH

JUDGEMENT

(1.) Revenue by this appeal under Section 260A of the Income Tax Act, 1961 (Act, for short), which relates to Assessment Year 2000-01, impugns reduction of penalty to the extent of Rs. 11,97,100/- under Section 271(1)(c) of the Act. In other words, penalty of Rs. 16,500/- imposed under Section 271(1)(c) has been sustained. At the very outset, we record that the appellants have not placed on record the order passed by the Commissioner of Income Tax (Appeals) in the quantum appeal. However, relevant portion of the said order has been quoted in the penalty order and we shall refer to the same. The respondent-assessee was subjected to search operations under Section 132 of the Act and thereafter notice under Section 153A was issued. The Assessing Officer made two additions. Rs. 2,24,000/- on account of low withdrawals towards household expenses. He made another addition of Rs. 50,000/- on account of purchase of immovable property. On appeal, Commissioner (Appeals) observed that the assessee and his wife had shown personal withdrawals of Rs. 2,10,000/-, which were not noticed and taken into consideration by the Assessing Officer. The said personal withdrawals were taken into consideration and the addition was restricted to Rs. 54,000/-. Thus, the Commissioner (Appeals) reduced the addition on account of lack of withdrawals for personal expenses from Rs. 2,64,000/- to Rs. 54,000/-. Obviously this was an estimate.

(2.) The Commissioner (Appeals), however, made an addition of Rs. 33,30,981/-. The exact reason for making the said addition is not indicated or stated in detail, but in the order of penalty, the following portion of the order passed by the Commissioner (Appeals) in quantum proceedings is quoted:-

(3.) It is apparent from the aforesaid quote that the assessee conceded and agreed to the said addition, which had not been made by the Assessing Officer, before the first appellate authority in the quantum appeal. It is also accepted and admitted that the Commissioner (Appeals) did not issue any notice or record that notice be issued under Section 271(1)(c) of the Act in respect of the said addition. Revenue cannot and are obviously unable to answer why and for what reason Commissioner (Appeals) did not issue the said notice. This being the factual position, we do not see any reason to interfere with the order passed by the tribunal.