TMI Blog2019 (7) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... curate particulars of income. Therefore, it is clear that the AO was not clear in his mind whether it was a case of furnishing of inaccurate particulars or concealment of income or he has failed to strike off the irrelevant portion in the proforma of the notice before issuing the same. Therefore, the additional grounds of appeal is to be admitted and allowed in view of the decision of the jurisdictional High Court in the case of Pr. CIT vs. Baisetty Revati reported in [ 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT] The additional ground is therefore, allowed. Even on merits of the other grounds, we find that the disallowance of expenditure was not because it has been found to be bogus expenditure but it was because the assessee could not substantiate the same with bills and vouchers. In response to the show cause notice u/s 271(1)(c), the assessee had filed its explanation and there is no finding of the AO that the assessee s explanation is not acceptable or that it is not bonafide. Therefore, we are in agreement with the contentions of the learned Counsel for the assessee that though it is a good ground for making addition, it cannot be a ground for penalty u/s 271(1)(c) as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. During the A.Ys 2009-10 2010-11, the assessee was assessed in the name of M/s. Girijapati Reddy Co. and thereafter it is in the name of M/s. BGR Mining Infra Pvt. Ltd. A survey u/s 133A of the I.T. Act was conducted in the assessee s business premises on 14.10.2014 based on the information that the assessee firm is involved in siphoning off huge funds through the partners accounts. During the course of survey, the books of account maintained by the assessee was examined in details and the AO noticed that the claim of expenditure was mainly labour payments, but no details were available in respect of site and projects for which such expenses were claimed. He also noticed that the labour expenses were claimed by the firm as well as individual partners for and on behalf of the firm and at the business premises of the assessee, substantial volume of vouchers were found which were considered as incriminating in nature. Based on the above facts found during the course of survey, a warrant of authorization u/s 132 was obtained from Director of Income Tax (Inv.), Hyderabad and the survey was converted into a search and seizure proceedings u/s 132 of the Act. 3. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... labour maistris, the Director submitted that the assessee cannot be in a position to maintain all the vouchers relating to labour maistris due to the volume of the turnover. However, he agreed to admit an amount of ₹ 26.00 crores for the financial years 2008-09 to F.Y 2014-15 u/s 132(4) of the Act over and above the income already declared in the returns of income of the respective years. The AO therefore, observed that the assessee has not been able to substantiate its claim of labour expenses and has admitted additional income of ₹ 26.00 crores for the financial years upto 2014-15 and the income was also declared in the returns of income of the respective years. The AO therefore, accepted the income returned by the assessee in response to the notice u/s 153C of the Act. 4. Thereafter, the AO initiated penalty proceedings u/s 271(1)(c) of the Act by issuing a show-cause notice u/s 271(1)(c) of the Act. The assessee vide letter dated 21.5.2017 filed his explanation stating that the expenditure claimed under the work site/labour expenses were not in dispute but since there were deficiencies regarding their maintenance, the assessee has offered the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessing officer in levying the penalty U/S 271 (1)( c) are contrary to the facts and circumstances of the case and ought to have appreciated the written submission made by your appellant and ought to have cancelled the penalty U/S 27 I (1)( c), levied by the Asst. Commissioner ofIncome Tax, Central Circle, Tiruapathi. 4. The Learned Commissioner of Income tax ought to have seen that for levying penalty U/S 271(l)(c), the Assessing officer is required to establish either concealment or furnishing of inaccurate particulars specifically, by brining positive material on record, and accordingly issue notice specifically, whether there were concealment of particulars or furnishing inaccurate particulars in the notice U/S 271(1)(c) itself and the Learned Commissioner ofIncome Tax ought to have held that penalty proceedings U/S 271(l)(c) was bad in law in the absence of specific reason in the notice issued U/S 271(l)(c), whether it is a case of concealment of particulars or furnishing of inaccurate particulars and ought to have cancelled the orders passed U/S 27I(l)(c) by Asst. Commissioner of Income Tax, Central Circle, Tiruapathi. 5. The Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turned income has been accepted and therefore, no penalty is leviable, he submitted that the admission of the additional income by the assessee is not voluntary but was made only after detection and confrontation in the search u/s 132 of the Act. He also relied upon the decision of the Hon'ble Madras High Court in the case of Sundaram Finance reported on 23.4.2018 for levy of penalty under such circumstances. 8. Having regard to the rival contentions and the material on record, we find that the penalty u/s 271(1)(c) is levied for not offering the additional income to tax in the original returns of income for offering the same only after confrontation during the course of search. The assessee has raised the additional ground against non-striking off the irrelevant portion of the show cause notice u/s 271(1)(c) of the Act, we find that the show cause notice for the A.Y 2009-10 is as under: Penalty notice u/s 271(1)(c) of the Act, 1961 PAN: AABFG9906A Date:31-12-2016 To M/s.B.Girijapathi Reddy Co. 16-11-380B Srinivasa Agraharam Sujat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee that though it is a good ground for making addition, it cannot be a ground for penalty u/s 271(1)(c) of the Act, as held by the Hon'ble Supreme Court in the case of Reliance Petrochem Ltd reported ion 322 ITR 158. 11. In the result, assessees appeals for the A.Ys 2009-10, 2010-11, 2012-13 2013-14 are allowed. 12. As regards the Revenue s appeal for the A.Y 2014-15, the AO wanted to levy penalty u/s 271(1)(c) of the Act for the very same reasons as in the A.Y 2009-10 to 2013-14. However, he issued a notice u/s 271AAB of the Actto the assessee. The assessee submitted his explanation and thereafter the AO held that the notice u/s 271(1)(c) was to be issued and that erroneously the provisions of section 271AAB of the Act was mentioned in the notice. He held that such mentioning will not invalidate the notice. Thereafter, he proceeded to levy penalty u/s 271(1)(c) of the Act. Aggrieved, the assessee preferred an appeal before the CIT (A), who observed that the requirements of conditions to be satisfied for initiating penalty u/s 271AAB of the Act and levy of penalty u/s 271(1)(c) of the Act are different. He held that having issued no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, on the other hand, submitted that the penalty u/s 271AAB and 271(1)(c) of the Act are under different circumstances and therefore, the order of the CIT (A) has to be upheld. 14. Having regard to the rival contentions and the material on record, we find that the this being the year of search and the assessee having offered undisclosed income in its return of income u/s 153C, the AO issued the notice u/s 271AAB of the Act, we find that penalty u/s 271AAB is leviable where search has been initiated and the assessee during the course of search admits undisclosed income and specifies the manner in which such income has been derived; and substantiates the manner in which the undisclosed income has been derived, whereas the penalty u/s 271(1)(c) is leviable for furnishing of inaccurate particulars or concealment of income. Thus, it is seen that these provisions are applicable in different situations and circumstances therefore, if the AO has issued notice u/s 271AAB of the Act without issuing a notice u/s 271(1)(c) of the Act. The AO gets the jurisdiction to levy the penalty by issuing a notice and therefore, it is not a procedural requirement but is a jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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