Income Tax Appellate Tribunal - Amritsar
Hoshiarpur Roller Flour Mills vs The Income-Tax Officer on 27 June, 2005
Equivalent citations: (2006)100TTJ(ASR)152
ORDER
Bhavnesh Saini, Judicial Member
1. This appeal by the assessee is directed against the order of the CIT (A), Jammu, headquaters at Amritsar dated 30-3-2001 for the assessment year 1997-98 whereby the CIT (A) dismissed the appeal of the assessee and confirmed the penalty under Section 271(c) of the Income tax Act.
2. We have heard the learned representatives of both the parties and gone through the observations of the authorities below.
3. The facts of this case are that the return declaring income at Rs. 91,870/- has been filed on 27-10-1997, The case was selected for scrutiny and the assessee was represented by the counsel Shri V.B. Aggarwal, C.A. The assessee firm derives income from running a flour mill. Book of accounts were produced, during the course of examination of the case but it has been found that the assessee has raised bills of purchase from M/s. Surya Enterprises, G.T. Road, Damtal and M/s Ambika Co., Hoshiarpur but no genuine purchases from these two parties have been made. The A.O. noticed certain facts regarding these bills being fictitious are discussed party-wise as under :-
(1) M/s Surya Enterprises, Damtal :-
The summons Under Section 131 issued to this party returned unserved with the postal remarks that no such firm exist. Thereafter summons were again issued at the asking of Shri V.B. Aggarwal, counset for the assessee Dasti for service upon the party. The summons were issued on 3-3-2000 but on the date i.e. 8-3-2000, no one attended the proceedings despite issue of summons. On the bills, number of trucks has been mentioned which allegedly transported wheat from Damtal to Hosiharpur. The owners of the trucks were contacted and they have given in writing that they had never transported wheat for M/s Surya Enterprises from Damtal to Hoshiarpur during the period, relevant to the assessment year under appeal. The A.O found that there is mention of assessees own three trucks on said bills but in the drivers` account of these trucks, there is no mention that any of the trucks had transporting wheat. The A.O also noticed that M/s Surya Enterprises appears to be an agent of the assessee as the person who deposited cash in assessees account and who also signed on the withdrawal cheques on 26-5-1996 and 19-8-1997 of M/s Surya Enterprises Is the same. The manager, Canara Bank, pathankot vide his letter dated 11-3-2000 has confirmed that the signatures are of the same person.
(2) M/s Ambika Trading Co., Hoshiarpur ;-
Shri Romesh Kumar Dhir proprietor of this concern has made confession in his statements dated 7-1-2000 and 14-3-2000 that he has made no genuine sale and all the bills issued by him are fictitious. It had been further stated by him that the employees of the assessee firm namely Shri Dharam Pal and Shri Kamal Kishore used to take self cheque from him and they would take away the amount the day any cheque was credited into his account with the Punjab and Sind Bank, Hoshiarpur on account of payment against the fictitious sale shown by him.
4. The A.O. also found that there are no mention of truck number on the sale voucher and on the gate pass no date is mentioned. In this case one of the owners of the trucks has also denied in his statement to have transported any wheat for the assessee.
4-A. The assessee in reply to the above said material filed reply dated 22-3-2000 in which it was briefly stated that it is unjustified to abserve that the assessee made fictitious purchases from the above parties. It was also explained that both the parties were assessed to income tax and that the assessee firm made payments to both the parties by account payee cheques which have been accounted for in their books. In case there is any cash withdrawals by the assesse's employees, it does not establish any nexus between the assesse and both the parties and such withdrawals may be for two or three instances. It was also explained that summon under Section 131 was served upon the party and in case they have not attended the office, they may again be summoned for verification of the purchases. The assessee also filed confirmed copies of the accounts of these parties. It was explained that purchases are genuine and statement of Shri Romesh Kumar is fictitious and contradictory with the copy of account duly confirmed. It was submitted that without prejudice to the above submission, It is submitted that there is no involvement of any partner of the firm and there may be employees of the assessee firm who were in the absence of the partners making/indulging in committing fraud with the firm for which the partners are making independent enquiries.
5. The A.O. considering the reply of the assesse was of the view that the extensive enquiries were made in this case which proved that the purchases are bogus and fictitious. The A.O. also observed that the reply of the assessee clearly proves that the assessee admitted indirectly the default but attributed it to the employees. The statement of Shri Kamal Kishore, clerk of the assesse firm was recorded under Section 131 of the Income tax Act and he in his statement admitted that partners of the assessee firm were busy in launching their new venture at Ludhiana and in their absence he used to make the purchases as well as sales. He has further stated that the sometimes some parties sold the goods but they did not issue any voucher and the voucher delivered were of some other parties. The A.O. on this basis observed that the assessee firm had made purchases from outside the books of account and procured fictitious bills from theses two parties. The A.O. on the facts and the circumstances of the case estimated that the assessee had initial purchases made outside the books of account to the extent of Rs. 10 lacs and subsequently purchases were made by rotation this amount. The A.O. also held that the assessee earned profit of Rs. 3,50,000/- which escaped assessment on account of suppression of sales made by the assessee Certain expenses were also disallowed and ultimately the assessment In a sum of Rs. 15,93,570/- was made against the assessee. It is admitted fact that the findings of the A.O. were not challenged before the CIT (A) and, therefore, the assessment order stands confirmed. The A.O. on the basis of the findings given in the assessment order initiated penalty proceedings under Section 271(1)(c) of the Income tax Act. Show cause notice under Section 271(1)(c) was issued as the assessee has furnished inaccurate particulars of income in respect of the above additions. The assessee in response to the show cause notice filed the reply through Shri V.B. Aggarwal. C.A. on 30-3-2000, which is reproduced as under :-
Reference Your honour's show cause notice Under Section 271(1)(c) of the Act it is submitted that there is assessee concealment of any income on the part of the assessee and as submitted in my replies that all the sales as well as purchases made by the assessee are genuine and duly recorded in the books of account and stock, registers my reply dated 3-3-2000 by referred.
2. That if there is any discrepancy in purchases or sales this is absolutely not known to the partners of the firm and it may have been done by the employees which is also evident from the statements recorded by your honour in the course of the assessment proceedings. The statement of Shri Kamal Kishore and Shri Manohar Lal, the employees of the firm may kindly be referred. Further assessee's reply dated 22-3-2000 may also be taken into consideration in this regard.
3. That since the assessee has agreed for the levy of penalty under Section 271(1)(c), the assessee may be levied this penalty on the basis of the negligence of the employees of the assessee only. The penalty levied be minimum on the tax payable by the assessee firm and after taking into consideration the replies filed in the course of the assessment proceedings. The assessee has agreed for the levy of penalty to buy peace of mind.
(Underlined by us)
6. The A.O. considering the reply of the assessee had impose the penalty under Section 271(1)(c) of the income tax Act vide order dated 31-3-2000.
7. The penalty order was challenged before the CIT (A) and the appeal was instituted on 8-1-2001 Shri V.B. Aggarwal. C.A. submitted before the CIT (A) that the addition has been made without appreciating the facts of the case. He has submitted that all the purchases and sales are verifiable. No addition is possible on the basis of the consumption of the electricity, since the assessee maintained regular books of account and the stock register, purchases and sales are verifiable. Once the verification of manufacturing account is possible, no addition could be made on the basis of irrelevant facts. The learned counsel for the assessee relied upon the order of the CIT (A), Amritsar and the decision of the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. reported in 83 ITR 26. The CIT (A), considering the submission of the assessee dismissed the appeal of the assessee as the assessee did not have any grievence before him because the assessee agreed to the levy of penalty. The findings of the CIT (A), in para 2.3 are reproduced as under:-
2.3 On assessee careful consideration of the facts of the case, I find no merit in the submission made on behalf of the appellant. All the case law referred to by the ld. Counsel is on the levy of penalty in cases where the assessee agrees to certain addition. He has tried to make out assessee case that penalty cannot be leived unless the facts of concealment is establish. The fact of the case under consideration are clearly dintinguishable. In this case, the authorized representatives including assessee partner of the firm agreed to the additions as well as the levy of penalty. Once the assessee agrres to the levy of penalty, he cannot have any grievance against such levy. Reliance for this proposition is place don the judgement of the Punjab and Haryana High Court in the case of Banta Singh Kartar Singh v. CIT 125 ITR 239. In that case, the partners as well as the Chartred Accountant agreed to the levy of penalty. It was held by the humble judges of the High Court that an order based on an agreement cannot give rice to grievances and the same cannot be agitated in appeal. However, if the appellant is of the view that agreement was made under assessee mistaken belief of fact or law, he should make an application for rectification to the authority which passed the order. Until rectification is made, appeal is not competent (168 ITR, 375). In view of the facts of the case penalty levied by the A.O. is confirmed.
The assessee is in appeal before us.
8. The learned counsel for the assessee argued that the authorities below have wrongly imposed the penalty against the assessee. He was referred to various replies filed before the A.O. at the assessment stage and at the sales and purchases have been properly recorded in the books of accounts which have been maintained in the ordinary course of business and that the assessee though received the notice for the purpose of service upon M/s. Surya Enterprises has served the notice upon the said party. He has further submitted that if the said party did not appear then the A.O. should have taken further recourse for summoning of the party for confirmation of the purchases. As regard M/s. Ambika Trading Co., he has submitted that Shri Romesh Kumar Dhir proprietor has made assessee contradictory statement to that the copy of account duly confirmed by him. He has also referred to the reply of the assessee filed on dated 22-3-2000 referred to above in this order. He has also referred to the reply dated 30-3-2000 filed before the A.O. at the penalty stage and submitted that in this reply dated 30-3-2000 in para 3, the assessee agreed for levy of the minimum penalty on the basis of discussion with the A.O. The main point of discussion with the A.O. Was that no Penalty shall be levied on the addition made in the trading account as all the evidence required was filed by the assessee and moreover the trading addition was mainly made on agreed basis. In respect of the disallowance out of the expenses claimed the assessee had agreed for the levy of penalty to buy peace of mind. He has submitted that certain expenses were disallowed upon which the agreed for imposition of penalty in the said reply. He has submitted that this point was clarified before the CIT(A ) in the reply copy of which is filed at page 33 of the paper book. He has also referred to the affidavit of Shri Anil Kumar, partner dated 27-2-2001, copy of which is filed at page 35 of the paper book and submitted that no paper opportunity was given by the A.O. at the time of imposition of penalty and that at the assessment stage, the assessee under duress signed certain papers before the A.O. at quantum stage. The learned counsel for the assessee also referred to the affidavit of Shri Anil Kumar dated 5-3-2005, copy of which is filed at page 39 of the paper book in which it was stated that the additions/ disallowances were admitted by him before the A.O. during the course of assessment proceedings to buy peace of mind and these were related to mistakes/ negligence of his employees. He has also stated in the affidavit that no admission was made before the A.O. either by him or by his authorised representative for levy of the penalty under Section 271(1)(c) of the income tax Act on the disallowance made by the A.O. under Section 143(3) of the Income tax Act. The learned counsel for the assessee submitted on the above basis that the assessee or his counsel never agreed for the imposition of penalty. However, he has admitted that the assessment order was not challenged before the CIT (A) on quantum. The learned counsel for the assessee submitted that imposition of penalty the A.O. has to prove that the assessee has concealed the particulars of his income or furnished inaccurate particular of income. The learned counsel for the assessee further submitted that on admission penalty cannot be imposed. He has relied upon decision of the Hon`ble Punjab and Haryana High Court in the matter of Chhat Mull Aggarwal v. C.I.T. reported in 116 ITR 694, decision of the Hon`ble Kerala High Court in the matter of C.I.T. v. India Sea Foods, reported in 218 ITR 629, decision of the Hon`ble Bombay High Court in the matter of Padgilwar Brothers v. C.I.T. reported in 258 ITR, 629, decision of the Hon`ble Mysore High Court in the matter of D. Halappa Sons v. C.I.T. reported in 95 ITR 542 order of the I.T.A.T., Amritsar bench in case of Ramesh Chander Kundra v. ITO 5 T.L.R. 342 and decision of the I.T.A.T., Ahemdabad Bench in the case of Patel Oil Mills v. I.T.O. 38 TTJ 277.
9. The learned counsel for the assessee argued that the CIT (A) should have decided the appeals of the assessee on merits and further submitted that the decision of the Hon`ble Punjab and Haryana High Court in the matter of Banta Singh Kartar Singh v. CIT, reported in 125 ITR, 239 as relied upon by the CIT (A) in not applicable in view of the above decision and particularly when the Hon`ble High Court has not considered its earlier decision in the case of Chhat Mull Aggarwal (supra).
10. However, the learned counsel for the assessee has fairly submitted that the earlier decision of the Hon`ble Punjab and Haryana High Court in the case of Chhat Mull Aggarwal (Supra) was not approved and dissented from by the Hon`ble Bombay High Court in the matter of Ramesh Chandra & Co., reported in 168 ITR 375. The learned counsel for the assessee on relying upon the decision of the Hon`ble Supreme Court in the case of A.R. Antulay v. R.S. Nayak , decision of the Hon`ble Supreme Court in the mater of B. Satyanarayana Rao 2000 AIR (SC) 1729 and decision of the Hon`ble Supreme Court in the matter of Jaisri Sahu v. Rajdewan Dubey and Ors. submitted that the circumstances that assessee decision is reached per incuriam, merely serves to denude the decision of its precedent value. It would not be binding as judicial precedent. A. co-ordinate bench can disagree with it and decline to follow it. A larger bench can overrule such decision. When a Previous decision is so overruled it does not happen-nor has the overruling bench any jurisdiction so to do that the finality of the operative order, inter parties, in the previous decision is overturned. In this context the word `decision` means only the reason for the previous order and not the operative order in previous decision binding inter parties. He has further submitted that rule of per incurium can be applied where a court omits to consider a binding precedent of the same court or the Supreme Court rendered on the same issue or where a. court omits to consider any statute while deciding that issue. He has further submitted that in such circumstances all other decision has to be ignored on the principal of per incurium as the earlies decision of the Hon`ble Punjab and Haryana High Court was not Considered in the later decision. The learned counsel for the assessee according submitted that the order of the CIT (A) to decide the appeal of the assessee on merits.
11. The learned counsel for the assessee lastly argued that the A.O. has not recorded his satisfaction as regards concealment of income and furnishing inaccurate particulars of income by the assessee in the assessment order. Therefore the order imposing penalty is liable to be set-aside. He has relied upon the decision of the Hon`ble Punjab and Harayana High Court in the matter of C.I.T. v. Munsih Iron Store reported in 263 ITR 484 and the decision of the Hon`ble Delhi High Court in the matter of C.I.T. v. Ram Commercial Enterprises Ltd., reported in 246 ITR 568. The learned counsel for the assessee lastly argued that the decision of the High Court in the matter of Jivatlal Purtapshi v. C.I.T. reported in 65 ITR 261 is not applicable in view of the above circumstances.
12. On the other hand, the learned D.R. submitted that the assessee agreed to the addition on quantum as well as the penalty. The learned D.R. Further submitted that the assessment order was available with the assessee prior to the issue of the penalty notice. Therefore, if the assessee was satisfied that it has not made any admission with regard to the quantum addition than appeal on merits could have been filed but the assessee did not file any appeal before the CIT(A) on quantum, which shows that the assessee was guilty of concealment of income and filing inaccurate particular of income. The learned D.R. further submitted that the A.O. issued show cause notice to the assessee before imposing the penalty but no appeal on merits was field and the counsel for the assessee agreed to the imposition of penalty. Therefore, the assessee is not aggrieved by the order of the A.O. and as such the appeal before the CIT(A) was not maintainable. The learned D.R. further pointed out that though the penalty order was passed on 31-3-2000 but the appeal before the CIT(A) was instituted on 8-1-2001 which shows that the assessee agreed to the penalty but letter on realizing the consequences filed the appeal before the CIT(A) which was not maintainable. The learned D.R. further submitted that the A.O. made enquiries at the assessment stage and the materials and evidences were found against the assessee as regards bogus purchases then the assessee agreed to the addition on quantum. The learned D.R. Submitted that the A.O. has mentioned in the assessment order his satisfaction to initiate the penalty proceedings and as such the decisions of the Hon`ble Punjab and Haryana Hight Court and the Delhi High Court as relied upon by the learned counsel for the assessee are not applicable. The learned D.R. submitted that since the assessee did not explain the issue on merits, therefore the A.O. rightly imposed the penalty on merits as well as on the admission of the assessee `s counsel. As a result, there is no infirmity in the orders of the authorities below. The CIT(A) rightly rejected the appeal of the assessee as assessee had no grievance against the order of the penalty.
13. We have considered the rival submitted and material available on record. Section 271(1)(c) provides that if the A.O. or Commissioner (Appeals) in the course of any proceedings under this Act is 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 Explanation (1) to Section 271(1)(c) of the Act provides that;
Explanation 1,-Where in respect of any facts material to the computation of the total income of any person under this Act-
(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
14. On a plain reading of the aforesaid provision would clearly show that the A.O. can impose penalty against the assessee if he was satisfied that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. Explanation(1) to the above Section 271(1) (c) put assessee burden upon the assessee to explain the facts and material and provides that if the assessee fails to offer an explanation or offers an explanation which is found by the A.O. to be false then the amount added or disallowed in computing the total income in respect 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.
15. The facts of the above case clearly shows that the A.O. at the assessment stage made enquiries with regard to the purchase made by the assessee from two of the parties namely, M/s Surya Enterprises and M/s Ambika Trading Co. In the case of M/submitted Surya Enterprises summons returned unserved as the postal authorities informed that such parties did not exist at the addresses. The sommons given to the assessee Dasti, according to the reply of the assessee served upon the concerned party but such party did not appear before the A.O. In the case of M/s. Ambika Trading Co. proprietor of the concern made assessee statement against the assessee and admitted that no sale has been made by this party to the assessee and only fictitious bills have been issued. The A.O. also made enquiries from the transporters through whom the goods were allegedly transported but they have denied to have transported any goods for the aforesaid party to the destination of the assessee. Some of the trucks whose numbers mentioned on the sale bills belonging to the assessee but in the drivers account of these trucks there is no mention that any truck transport goods from Damtal to Hoshirpur. The crux of the A.O. proved that the assessee had shown all fictitious and bogus purchases form these two parties. The material was confronted to the assessee but the assessee instead of explaining the issue through relevant and cogent material filed assessee reply dated 22-3-2000 and factually admitted the involvement of his employees with regard to the bogus purchases. Even statements of the employees of the assessee namely, Shri Sharam Pal and Shri Kamal Kishore were recorded in which they have confirmed the allegation of the A.O. This fact is also admitted by the assessee in its reply dated 30-3-2000 which was filed at the penalty stage before the A.O. Theses facts would show that the assessee was aware of the facts which were gathered by the A.O. on enqulry and still the assessee admitted the fact as regards making bogus purchases The acts of servant are acts of master and master is liable for the same acts. The assessee if at all was aggrieved against the quantum proceedings, could have challenged the assessment order before the CIT (A). The assessee did not file any appeal against the assessment order. Therefore, allegation of the assessee that he was under duress to sign certain papers at the quantum stage has no value and the explanation of the assessee to that effect is rejected. The A.O. in the assessment order has specifically recorded "penalty proceedings under Section 271(1)(c) are initiated for furnishing inaccurate particulars of income" The findings of the A.O. in the assessment order and the enquiries conducted by him and admitted by the assessee would clearly prove that the A.O. was satisfied that the assessee has concealed the particulars of his income and has furnished inaccurate particulars of such income. The A.O. initiated the penalty on such facts and issued show cause notice to the assessee. The assessee instead of explaining the issue on merits filed reply dated 30-3-2000 before the A.O. at the penalty stage and agreed for levy of the penalty. The reply is reproduced in this order. Therefore, it is clear that the assessee not only at the quantum proceedings has admitted the concealed income but also admitted are the stage of penalty and has agreed to the addition as well penalty. The reply of the assessee are the penalty stage is very specific with regard to the admission of the fact of bogus purchases. The assessee did not file any reply on merits rebutting the evidence collected by the A.O. The assessee has, therefore failed to offer an explanation before the A.O. in respect of the facts material to the computation of total income, therefore same deemed to represent the income in respect of which particulars have been concealed. Therefore the Explanation (1) to Section 271(1)(c) is clearly attracted in the case of the assessee the assessee has thus failed to make out a case that agreed to the penalty and quantum addition in order to buy peace of mind. The assessee admitted these facts because A.O. collected evidence against the assessee through enquiries into the matter. The Hon`ble Supreme Court in the matter of C.I.T. v. Mussadilal Ram Bharose reported in 165 ITR 14 with regard to the legal proposition on the penalty held that " The position, therefore in law is clear. If the returned income is less than 80% of the assessee income the presumption is raised against the assessee that the assessee is guilty of fraud or gross or willful neglect as a result of which he has concealed the income but this presumption can be rebutted. It is for the fact-finding body to judge the relevancy and sufficiency of the materials."
16. The Hon`ble Supreme Court in the matter of K.P. Madhusudhanan v. C.I.T. reported in 251 ITR 99 held:
The Explanation to Section 271(1)(c) is a part of Section 271. when the assessing officer or the Appellate assistant Commissioner issues a notice under Section 271, he makes the assessee aware that the provisions thereof are to be used against him. These provisions include the Explanation By virtue of the Notice under Section 271 the assessee is put to notice that if he dose not prove in the circumstances 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 concealed the particulars of his income or furnished inaccurate particulars thereof and consequently be liable to the penalty under the section. No express invocation of the Explanation to Section 271 in the notice under Section 271 is necessary before the provisions of the Explanation are applied.
17. In the present case, the assessee agreed to the quantum addition and did not challenge the assessment order before the CIT (A) and thus the assessment become complete and final at the income computed by the A.O. Which was agreed to by the assessee after enquiry conducted by the A.O. in which the material was found against the assessee to have made bogus purchases. It is settled law that though the quantum and penalty proceedings are different but the findings in the assessment order have probative value at the penalty stage. The assessee was given show cause notice at the penalty stage, therefore, if at all the assessee was of the view that the addition is unjustified, should have explained the issue on merits instead of admitting concealment of income and filing of inaccurate particulars. No reply whatsoever was filed before the A.O. to explain the issue on merits which would clearly show that the assessee has failed to offer any Explanation before the A.O. In such circumstances, the A.O. was justified in drawing adverse inference against the assessee in accordance with the law and Explanation (1) to Section 271(1) of the income tax Act. The A.O. has given sufficient opportunity of hearing to the assessee but the assessee did not seek any time from the A.O. to rebut the material collected by the A.O. Therefore merely penalty was levied on 31-3-2000 is not enough to conclude that no sufficient opportunity is given to the assessee. The learned counsel for the assessee by referring to the reply filed before the CIT (A) submitted that the assessee agreed for levy of minimum penalty on the basis of the decision with the A.O. and main point of decision with the A.O. was that no penalty shall be levied on the addition made in the trading account as all the evidence required was filed by the assessee and moreover, the trading addition was being made on agreed basis. In respect of the disallowance out of expenses claimed, the assessee has agreed for levy of penalty to buy peace of mind. The learned counsel for the assessee tried to argue that the assessee agreed to penalty only on disallowance of the expenses. We do not agree with the submitted of the learned counsel for the assessee. At the quantum proceeding before the A.O. at the assessment stage, the assessee in the reply dated 22-3-2000 on the issue of bogus purchases submitted that there is no involvement of any partner of the firm and there may be employees of the assessee firm who were in the absence of the partners are also making independent inquiries. In the reply dated 30-3-2000 by the counsel for the assessee at the penalty stage in para 2 also it was stated that if there is any discrepancy in purchases or sales, this is absolutely not known to the partners of the firm and it may have been done by the employees. The reply filed by the counsel for the assessee before the A.O. clearly proves that the assessee after thought made up assessee story to show that the assessee has only agreed to the penalty on disallowances of the expenses in order to buy peace of mind. The A.O. made enquiries as regard bogus purchases upon which the partners of the firm shifted the burden upon the employees and also referred to the statements of Shri Dharam Pal And Shri Kamal Kishore. Therefore it is clear that whatsoever might have been done by the employees was regarding bogus purchases. We also find from the assessment order that disallowance out of the expenses have been made by the A.O. on merit considering the explanation of the assessee. Therefore it has nothing to do with the involvement of any of the employees of the assessee theses facts would clearly prove that the assess intentionally and willfully concealed the particulars of income and filed the inaccurate particulars of income. Therefore, we reject this contention of the learned counsel for the assessee in this regard.
18. the A.O. in the assessment order has specifically recorded his satisfaction with regard to initiating penalty proceedings for furnishing inaccurate particulars of income. Therefore, the findings of the A.O. in the assessment order and satisfaction recorded in the end of the assessment order would clearly prove that the A.O. was satisfied with regard to the concealment of particulars of income and filing inaccurate particulars of income by the assessee and as such we do not find any infirmity in the order of the A.O. initiating penalty proceedings against the assessee and as such the decision relied upon by the learned counsel for the assessee in the matter of Munish Iron Stores and Ram Commercial Enterprises Ltd. (supra) are clearly distiguishable and are not applicable to this case.
19. The Hon'ble Punjab and Haryana High Court in the matter of Chhat Mull Aggarwal (supra) hold that "There is no provision in the Income tax Act whereby the remedy of appeal against the order of the ITO or against the order of the AAC is barred if the impugned order mention that they had been passed on the admission of the assessee. The provisions of Section 246(1)(c) of the Income tax Act, entitle an assessee to file appeal against the order of the ITO before the AAC where the assessee denied his liability to be assessed under the Act. It would be a different matter if the AAC comes to the conclusion that the order was passed on the admission of the assessee and the assessee is unable to explain that the admission was wrongly recorded under some mistaken belief of fact and law." It was, therefore, held that the assessee was able to convince the AAC that admission made by him was not binding on him and was made under a misapprehension that the amount of Rs. 15,000/- was being added for the subsequent assessment year." However, in the appeal before us the assessee has not made out any case to show that the admission was made under some mistaken belief of fact and law. Admission on quantum as well as the penalty was very specific and as such the decisions referred to by the learned counsel for the assessee are clearly distinguishable and are not applicable.
20. The Hon'ble Punjab and Haryana High Court in the matter of Banta Singh Kartar Singh (supra) considered the provisions of Section 271(1)(c) in which the ITO discovers that the assessee firm had obtained hundi loans from M/s. Gurdit Singh Swaraj Singh, Amritsar, who denied having advanced any loan to the assessee and confessed that they were indulging in hawala business. Consequently the proceedings under Section 147(a) of the Income tax Act were initiated and the addition was made on surrender. Revised return was also filed disclosing the additional income. However, the assessee's petition for surrender was not treated as petition under Section 271(4A) of the Income tax Act. Before the A.O., the assessee agreed to be taxed of the amount in question. The assessee also agreed to levy of the minimum penalty. The assessee has accepted the assessment order and no appeal was preferred. Consequently, the penalty proceedings under Section 271(1)(c) were initiated and the counsel for the assessee at the penalty proceedings stage specifically agreed to levy of penalty. The Tribunal confirmed the penalty as it was agreed by the assessee and there fore, refused to interfere in the order. The Hon'ble Punjab and Haryana High Court, therefore, on such facts observed that it was on the agreement of the assessee, which agreement mentioned the figure as well as the rate of penalty, and on the basis thereof tat the amount of penalty in question was imposed, held that the Tribunal rightly placed reliance upon the section of the Bombay High Court in the case of Jivatlal Purtapshi for the proposition that the order based on agreement cannot give rise to grievances and the same cannot be agitated in the appeal. For these reasons reference, in question, was decided in favour of the Revenue and against the assessee.
21. The aforesaid decision of the Hon'ble Punjab and Haryana High Court in the matter of Chhat Mull Aggarwal (supra) was dissented from by the Hon'ble Bombay High Court in the matter of Ramesh Chandra & Co. v. C.I.T. 168 I.T.R. 375 in which it was held that the assessment on the basis of the admission by the assessee. The appeal against the assessment not maintainable. It was held in this case that if the assessee has made a statement on the facts, he could have no grievance against the taxing authority taxing the same in accordance with the statement. If they have no grievance, he can file no appeal. The Hon'ble Bombay High Court relied upon its earlier decision in the case of Jivalal Purtapshi, reported in 65 ITR 261.
22. We may refer to the decision of the Bombay High Court in the matter of Jivatlal Purtapshi, reported in 65 ITR, 261 in which it was held Held, that the department, having agreed to delete the amount form the assessment and having conceded the deletion before the Appellate Assistant Commissioner, cannot be held to be aggrieved by this part of the order to enable it to file an appeal to the Tribunal; the appeal of the department regarding the deletion of the amount was neither competent nor capable of being entertained by the Tribunal.
23. We have also considered both the decisions of the Hon'ble Punjab and Haryana High Court in the matter of Chhat Mull Aggarwal and Banta Singh Kartar Singh (supra). The decision in the matter of Chhat Mull Aggarwal is clearly distinguishable as referred to above, which is also dissented by the Bombay High Court in the later decision. The earlier decision of the Punjab and Haryana High Court in the matter of Chhat Mull Aggarwal is on quantum bat in the case of Banta Singh Kartar Singh, i.e. later decision is directly on the penalty under Section 271(1)(c). Even though the Hon'ble Punjab and Haryana High Court has not considered its earlier decision in the later decision in the case of Banta Singh Kartar Singh but ratio in the case of Chhat Mull Aggarwal is not applicable to the present case as the assessee has failed to explain before the authorities below that admission made by it was under some mistaken belief of fact and law. Rather the assessee in a very specific language admitted and agreed to the quantum addition as well as agreed to the penalty as discussed above. The facts of both the cases decided by the Punjab and Haryana High Court are different. Therefore, the contention of the learned counsel for the assessee that as per rule of per incuriam the later decision in the case of Banta Singh Kartar Singh is not applicable and has no precedent value is misconceived and is rejected. The decision in the case of Banta Singh Kartar Singh is therefore, applicable in this appeal before us.
24. We may discuss the remaining cases relied upon by the learned counsel for the assessee.
(1) In the case of India Sea Foods (supra), it was held that there was no conscious concealment of income and this was not a case where the Revenue through its machinery unearthed the concealment and as the Tribunal on a consideration of the entire matter had found that there was no concealment as such by the assessee it could not be said that the Tribunal's finding was perverse or legally wrong and, therefore, there was no point for reference.
(2) In the case of Padgilwar Brothers v. C.I.T. (supra), it was held that even though there is admission that there was some concealment of income, yet before penalty is imposed the assessee will be entitled to say that there has been failure on the part of the ITO to follow up the requirement of law and the assessee is entitled to substantiate this contention.
(3) In the decision of D. Halappa sons v. C.I.T. (supra), none of the authorities had stated that the assessee has consciously concealed the particulars of its income. No penalty could be imposed merely on the concession of the assessee or his representative.
(4) In the decision of Ramesh Chander Kundra (supra), the Appellate Tribunal held that the appeal lies before the AAC against an agreed assessment where the assessee agrees before the ITO under erroneous view or under some misunderstanding.
(5) In the order of Patel Oil Mills (supra), the Appellate Tribunal held that where the onus shifted upon the assessee has been satisfactorily explained discharged no penalty should be imposed. In this case the admission made by the assessee was not absolute and unqualified.
The facts considered in the above cases are clearly distinguishable. We have recorded the facts in the preceding paragraphs that the A.O. made enquiries and found that purchases shown by the assessee are bogus. The assessee agreed at the quantum stage as well as at the penalty stage as even at the penalty stage the assessee did not offer any explanation to the material collected by the A.O. Therefore, it is not a case of imposition of penalty on mere admission of the assessee. The A.O. collected sufficient relevant and cogent material and evidence against the assessee to prove that the assessee made bogus purchases. The findings of the A.O. have not been rebutted by the assessee in any way. Even at the penalty stage, the assessee did not ask for cross-examination of any party and even did not rebut the material evidence collected by the A.O. Therefore, the decisions relied upon by the learned counsel for the assessee are not applicable to this case. The quantum reply as is referred to by the learned counsel for the assessee have no relevancy in the penalty proceedings as the assessee did not file any appeal challenging the assessment order.
25. considering the above discussion, we are of the view that the penalty has been rightly imposed and the CIT(A) was justified in placing reliance on the later decision of the Punjab and Haryana High Court in the matter of Banta Singh Kartar Singh. Therefore, the CIT(A) was also justified in holding that the assessee has no grievance at all to agitate the matter in appeal before him as the assessee agreed before the A.O. on merits for levy of penalty. Therefore, we do not find it to be a fit case for interfering in the impugned orders. We confirm the same and dismiss the appeal of the assessee.
26. As a result, the appeal of the assessee is dismissed.