S. 271(1)(c): If the basis on which penalty is initiated by the AO and the basis on which the quantum is confirmed on merits by the Tribunal are different, penalty cannot be levied

(i) It is abundantly clear that the very basis for initiation of the Penalty Proceedings stood negated by the Order of the Tribunal in an appeal filed by the assessee against the Order of the Assessing Officer in the Assessment Proceedings.

(ii) The basis for initiation of Assessment Proceedings by the Assessment Officer is that the Assessment Officer disbelieved the claim of the assessee that he was engaged in the business of discounting drafts, whereas the Tribunal held that the assessee carries on the business of Draft Discounting. The assessee has stated that the amount in the account is the amount of the drafts received of which assessee charges Rs.1/per thousand as commission. Explanation (1) to Section 271(1)(c) of the Act states that if a person fails to offer an explanation or offers an explanation which is found by the Assessing Officer 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 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 purpose of Clause (c) of the said SubSection be deemed to represent the income in respect of which particulars have been concealed. In the present case, no addition of the amount has been made, nor is a case of disallowance. Even the Tribunal had accepted the case of the assessee that he is carrying on the business of Draft Discounting. It is also observed that in many cases, the Tribunal has taken a view that in case of Draft Discounting, income is considered at Rs.1/per thousand and in some cases, at Rs.2/per thousand. In the present case, it considered to Rs.2/per thousand. The assessee, therefore, was not required to give any explanation as his case was accepted by the Tribunal in Appeal. As such, for all the above reasons, Explanation (1) to Section 271(1)(c) of the Act would not be attracted.