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TMI Blog2015 (11) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... ying penalty of Rs. 12,00,000/- and that too without assuming jurisdiction as per law and the impugned penalty order being illegal and void ab-initio and the impugned penalty order has been passed without appreciating the facts and circumstances of the case. 2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in passing the impugned penalty 'order being contrary to law as the assessment order framed under section 143(3) dated 25-10- 2010 was also illegal, beyond jurisdiction and void ab-initio. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in levying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 26.11.2009. In response to this assessee has furnished written reply as under "The gross maturity proceeds of the said investment amounting to Rs. 232,86,842/- includes Long- Term-Capital Gain of Rs. 32,86,842 which was declared in the 3assessee has not received any interest or any other income during the holding Period of the said investment in bonds and said Bonds were Long Term specified asset as also mentioned on the certificate issued by National Housing Bank". After the perusal of records and details filed by the assessee it is found that the reply filed by the assessee cannot be accepted as NHB bonds are specified assets in Terms of section 54-EC for claiming exemption on Long Term Capita) Gain and interest on "these bonds, is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 368 iii) CIT Vs Bhartesh Jain 235 CTR 220 6. The Ld. counsel for the assessee reiterated the submissions made before the A.O. as well also Ld. CIT(A). The Ld. D.R. submitted that N.H.B. issued a prospectus along with the application form of bond and that in such prospectus it is mentioned that interest would be paid on maturity. He also pointed out that T.D.S., has been made on interest by N.H.B. and argued that the assessee was fully aware that interest is taxable under the head income from other sources and had claimed T.D.S. credit. He prayed that the penalty be confirmed. 7. We carefully considered these submissions and the propositions laid down by various case law cited. The Hon'ble Karnataka High Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income-tax (Appeals) and the Commissioner. (i) The imposition of penalty is not automatic. j) The imposition of penalty even if the tax liability is admitted is not automatic. (k) Even if the assessee has not challenged the order of assessment levying tax and interest and has paid tax and interest that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment order that, it is on account of such unearthing or enquiry concluded by the authorities it has resulted in payment of such tax or such tax liability came to be admitted and if not it would have escaped from tax net and as opined by the Assessing Officer in the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n one limb and finding the assessee guilty of another limb is bad in law. (t) The penalty proceedings are distinct from the assessment proceedings. The proceedings for imposition of penalty though emanate from proceedings of assessment, it is independent and separate aspect of the proceedings. (u) The findings recorded in the assessment proceedings in so far as "Concealment of income" and "furnishing of incorrect particulars" would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on the merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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