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2016 (9) TMI 1509 - AT - Income TaxLevy of penalty u/s. 271(1)(c) - Addition u/s 68 - as argued Notice u/s. 274 show causing the assessee as to why the penalty u/s. 271(1)(c) ought not to be levied thereon did not cancel either of the two grounds, i.e., furnishing inaccurate particulars of income or the concealment of income, for which penalty under the said section is leviable - HELD THAT - Though carrying different connotations, the possibility of an overlap of the two cannot be excluded. The assessee in fact owns up the said credits as its income. Where, therefore, it is the assessee s own money that has found its way in its accounts, it is a case of direct concealment of income. There is accordingly no scope for the penalty proceedings being considered as bad or vitiated in law on that ground. This in fact, as its careful reading would show, is also the rationale and the ratio of the decision in Manjunatha Cotton Ginning Factory 2013 (7) TMI 620 - KARNATAKA HIGH COURT deciding otherwise, which therefore cannot in our view be considered as opposed to the decisions by the Hon ble Patna and jurisdictional High Courts, and must be considered as having been rendered in the facts of the case, i.e., where the assessee is not in the know of the charge against, or the default for which penalty is proposed to be levied on him. The assessee s argument fails. There being no separate initiation qua each addition - As we discern from the assessment order and the material on record, the assessee furnished no explanation during the assessment proceedings; failing to produce the creditors, as called for vide order sheet entry dated 14/10/2008. In penalty proceedings also the assessee s explanation (vide letter dated 18/6/2009) was only with reference to the addition u/s.68, i.e., qua which the penalty stands levied. Why? That is to say, there was no ambiguity or doubt that the penalty was initiated and proposed to be levied only qua this addition, i.e., qua which only it stands levied despite the assessee not furnishing any explanation qua the disallowance , to which there is no reference or even a whisper in the penalty order. Legally also, section 271(1B) stands inserted in the statute book by Finance Act 2008, with retrospective effect from 1/4/1989; the same reads as under, making it abundantly clear that that a mere initiation is deemed as to constitute a satisfaction of the Assessing Officer for initiating penalty proceedings u/s. 271(1)(c) We have in this order repeatedly emphasized of the assessment order (as well as the penalty order) in the instant case being both comprehensive and unequivocal in the matter, i.e., of a complete failure on the part of the assessee to furnish any explanation qua the relevant parameters, i.e., capacity and genuineness, with one person being not traceable , so that in respect of credit ascribed to him, even identity is not proved, leading to the inference of the impugned credit sums being the assessee s own money, which it in fact owns up. That is to say, the satisfaction stands clearly expressed, is plain and apparent; in fact, immanent in the assessment order. A deeming provision, it is well settled, is to be interpreted for the intended purpose, in light of it s object. Considered in this context, i.e., coupled with the words Initiated penalty u/s. 271(1)(c) by issue of notice separately after computing the taxable income in the assessment order, signifies a clear direction, leaving no option or discretion for the competent authority (AO) whether to take action or not, so that the same is only in the nature of a direction, as explained by the Hon ble Apex Court in Rajinder Nath vs. CIT 1979 (8) TMI 3 - SUPREME COURT . It in fact clarifies of the simultaneous issue of the notice u/s. 274 show causing the assessee in the matter.The assessee s second argument thus is also of no moment. Voluntary surrender would not attract penalty - The law in the matter is clear, and the assessee cannot take recourse to this plea upon detection of the income . The consistent and uniform judicial opinion in the matter; case law on which is legion, is that blameworthiness attaches to the assessee with reference to the original return, which cannot be avoided for filing a fresh return or making a surrender after the concealment is detected by the A.O The assessee has failed to adduce any evidence to rebut the clear and cogent findings qua capacity (of the creditors) and the genuineness (of the credit transactions), which are unproved, if not disproved, by the material on record, including the admission by the creditors, with the assessee, per its disclosure, owning up the credits, admitting the impugned sum as its income. The decisions in the case of Mak Data (P.) Ltd. 2013 (11) TMI 14 - SUPREME COURT and K. P. Madhusudhanan vs. CIT 2001 (8) TMI 8 - SUPREME COURT among others, which clarify the settled position in the matter, are clearly applicable in the present case. - Decided against assessee.
Issues Involved:
1. Legitimacy of the penalty notice under section 274 of the Income Tax Act. 2. Requirement of separate initiation of penalty proceedings for each addition. 3. Validity of penalty imposition in the case of voluntary income disclosure. Issue-wise Analysis: 1. Legitimacy of the Penalty Notice under Section 274: The assessee argued that the notice under section 274 was defective as it did not specify whether the penalty was for "furnishing inaccurate particulars of income" or "concealment of income." The tribunal referred to various judgments, including CIT vs. Manjunatha Cotton & Ginning Factory and CIT vs. Mithila Motors, to determine that the notice's primary purpose is to inform the assessee of the charge against them and provide an opportunity for a hearing. The tribunal concluded that the assessee was well aware of the charge and participated in the proceedings, thus the notice was valid despite the alleged defect. 2. Requirement of Separate Initiation of Penalty Proceedings for Each Addition: The assessee contended that penalty proceedings should be initiated separately for each addition. The tribunal found this claim factually and legally untenable. The assessment order clearly indicated the AO's satisfaction regarding the concealment of income and the initiation of penalty proceedings. The tribunal emphasized that section 271(1B) deems the satisfaction of the AO as sufficient for initiating penalty proceedings. The tribunal also noted that the assessee's explanation during penalty proceedings was only in reference to the addition under section 68, confirming that the penalty was initiated and proposed for this specific addition. 3. Validity of Penalty Imposition in the Case of Voluntary Income Disclosure: The assessee argued that the penalty should not be levied as the income was voluntarily disclosed. The tribunal referred to judicial opinions stating that blameworthiness attaches to the original return and cannot be avoided by subsequent voluntary disclosure. The tribunal highlighted that the assessee's disclosure was not voluntary but made after detection by the AO. The tribunal cited Mak Data (P.) Ltd. v. CIT, which clarified that voluntary disclosure does not automatically provide immunity against penalty. The tribunal found that the assessee failed to provide any evidence to rebut the findings of the AO, leading to the conclusion that the credits were the assessee's own money. Conclusion: The tribunal dismissed the assessee's appeal, upholding the penalty under section 271(1)(c) of the Income Tax Act. The tribunal found no merit in the arguments regarding the defective notice, the need for separate initiation of penalty proceedings, and the claim of voluntary disclosure. The tribunal emphasized the clear and unrebutted findings of the AO, leading to the inference of the credits being the assessee's own money and thus justifying the penalty.
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