Satish Kumar Mittal, J. - (1.) THIS order shall dispose of IT Appeal Nos. 470 and 472 of 2007, filed by the Revenue under Section 260A of the IT Act, 1961 (hereinafter referred to as 'the Act'), which are arising from the common order dt. 19th March, 2007, passed by the Income Tax Appellate Tribunal, Chandigarh, Bench 'B', Chandigarh (hereinafter referred to as 'the Tribunal'), passed in ITA Nos. 234 and 235/Chd/2006, in case of the assessee for the asst. yrs. 1992 -93 and 1993 -94, respectively. In both these appeals, the following substantial question of law has been raised for consideration of this Court: Whether on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the penalty imposed under Section 271(1)(c) of the IT Act ignoring its own finding of the fact that the assessee had concealed its income by not recording certain sales which were evident from the invoices and G.Rs found and seized?
(2.) IN both these appeals, common issue is involved which revolves around the penalty levied by the AO under Section 271(1)(c) of the Act, which has been confirmed by the Commissioner of Income Tax (Appeals) [hereinafter referred to as 'the CIT(A)']. The facts are being taken from IT Appeal No. 470 of 2007. For the asst. yr. 1992 -93, the assessee filed return of income on 30th Dec, 1992 showing income of Rs. 65,18,970. The return was duly verified by one of the directors of the company and was accompanied by copies of P&L a/c, trading account and balance sheet and other annexures duly audited by a chartered accountant. During the assessment proceedings, the AO came to know that the Central Enforcement Wing of Excise & Taxation Department carried out inspection of the business premises of the assessee on 23rd Jan., 1993 and seized certain documents. On scrutiny of those documents, the AO noticed that in one invoice book containing five sale vouchers, original copies of four bills were found torn and the duplicate and triplicate copies were available. By taking into consideration the said material and the statement of the director of the company, the AO arrived at a conclusion that the books of account of the assessee were not reliable and did not reflect its true income. Accordingly, the AO rejected the accounts of the assessee and concluded that the assessee had made unaccounted sales. While completing the assessment, the AO, in order to arrive at the quantum of such unaccounted sales, extrapolated the average sale price in 4 invoices to 53 invoices and proceeded to make an addition of Rs. 66,16,865. The said order passed by the AO was challenged by the assessee in appeal before the CIT(A), who endorsed the conclusion that the assessee had made unaccounted sales and was indulging in sales outside the books of account. The CIT(A), therefore, proceeded to apply yield of 93.13 per cent shown by the assessee in the immediately preceding year as against the yield of 92.57 per cent shown by assessee for the year under consideration. Accordingly, the addition of Rs. 15,50,000 was made. The assessee challenged the said order passed by the CIT(A) before the Tribunal, who vide its order dt. 11th July, 2003 upheld the order of the CIT(A) and the addition sustained by the CIT(A) was confirmed.
(3.) SUBSEQUENTLY , the AO on the basis of the addition having been confirmed, issued notice under Section 271(l)(c) of the Act for imposing penalty for concealing of income in respect of additions made on account of unaccounted sales. The AO, while rejecting the contentions of the assessee that the penalty proceedings are distinct and separate from assessment proceedings, therefore, the conclusion of the findings in assessment proceedings were not conclusive for penalty proceedings; that there was no evidence of any goods having moved from assessee's premises; no discrepancy had been found in the books of account; the fact that there was no finding that the invoices seized by the sales -tax authorities were made by the management; and that the income in respect of alleged sales had been earned by the assessee and there was no evidence of any actual funds being received by the assessee in respect of those sales, came to the conclusion that the assessee had unaccounted sales amounting to Rs. 15,50,306 and on this income, the assessee evaded a tax of Rs. 7,84,170. Accordingly, the penalty equivalent to the tax evaded was levied. The assessee filed an appeal against the said order before the CIT(A), which was dismissed.;