Case Law Details
RELEVANT PARAGRAPH
8. We have heard the rival submissions and perused the relevant material on record. A great deal of emphasis had been laid by he Id. DR on the fact that since the addition has been upheld by the tribunal, then the penalty should also be confirmed. In our considered opinion the mere fact of confirmation of addition cannot per se lead to the confirmation of the penalty. It is obvious that both the quantum and the penalty proceedings are independent of each other. In the penalty proceedings the assessee is given chance to show that why the penalty be not imposed with reference to the addition made or confirmed in the quantum proceedings. If the assessee succeeds in explaining his case then no penalty with follow and vice versa. It is, therefore, amply clear that the confirmation of the addition by the Tribunal in quantum proceedings cannot mean that the penalty be automatically confirmed. If the contention of the Id. DR is taken to the logical conclusion then the penalty proceedings would require obliteration from the statute and the very act of making addition in quantum should entitled the AO to impose penalty simultaneously.
9. Section 271(1)(c) provides that if the Assessing Officer or the Commissioner (Appeals) or the Commissioner, in the course of the proceedings in this Act, in satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty a sum which shall not be less than but which shall not exceed three times the amount of tax sought to be evaded by reason of the concealment of particulars of his income. Seven Explanations are there to section 271(1). Explanation (1) states that where in respect of any facts material to the computation of the total income of any person under this Act, 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 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. The effect of this Explanation is that if the necessary ingredients as staled herein are satisfied then the amount disallowed in computing the total income shall for the purposes of clause (c) of this section, be deemed to represent the income in respect of which the particulars have been concealed. The necessary elements for attracting this Explanation are three-fold.
(a) the person fails to offer the explanation, or
(b) he offers the explanation which is found by the authorities to be false, or
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