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TMI Blog2016 (4) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... le and are liable to be annulled. - Decided in favour of assessee - ITA No. 994 /PN/2013, ITA No. 995 /PN/2013 - - - Dated:- 11-3-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri Prayag Jha and Shri Pratik Jha For The Revenue : Shri Hitendra Ninawe ORDER PER VIKAS AWASTHY, JM : These two appeals have been filed by the assessee against the order of Commissioner of Income Tax (Appeals)-V, Pune for the assessment year 2008-09. Both the orders are dated 12-02-2013. In ITA No. 995/PN/2013, the assessee has assailed the order of Commissioner of Income Tax (Appeals) in confirming the disallowance of ₹ 58,40,941/- on account of development expenses. In ITA No. 994/PN/2013, the assessee has impugned the order of Commissioner of Income Tax (Appeals) in confirming the penalty levied u/s. 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The brief facts of the case as emanating from the records are: The assessee firm is engaged in the business of construction and land dealings. The assessee developed a project known as Madhuban Saicity in Talegaon. The assessee is also engaged in the purchase and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inaccurate particulars of income. Aggrieved by the penalty order u/s. 271(1)(c) dated 27-05-2011, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) confirmed the levy of penalty. Against the order of Commissioner of Income Tax (Appeals) confirming penalty, the assessee filed an appeal before the Tribunal. We will first take up the appeal of assessee arising from assessment proceedings. ITA No. 995/PN/2013 (A.Y. 2008-09) 3. Shri Prayag Jha and Shri Pratik Jha appearing on behalf of the assessee submitted that the assessee has agreed for the addition on the ground that no penalty shall be levied u/s. 271(1)(c) of the Act. The assessee had offered the amount in order to avoid litigation and to buy mental peace. The ld. AR referred to letter dated 30-11-2010 written by the assessee to Addl. Commissioner of Income Tax during the scrutiny assessment proceedings. The same is placed on record at pages 1 and 2 of the paper book. The ld. AR submitted that the assessee has made all payments through cheques. All the transactions are recorded in the books. However, the assessee is not having vouchers in supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice, the reasons for levy of penalty u/s. 271(1)(c) of the Act. The ld. AR submitted that the notice itself is defective, therefore proceedings arising from such defective notice are null and void. In support of his submissions the ld. AR placed reliance on the judgment of Hon'ble Karnataka High Court in the case of Commissioner of Income Tax Vs. Manjunatha Cotton Ginning Factory reported as 359 ITR 565 (Kar). 7. In the second limb of his argument, the ld. AR submitted that existence of conditions stipulated in section 271(1)(c) is sine qua non for initiation of penalty proceedings. Imposition of penalty u/s. 271(1)(c) is not automatic. The ld. AR submitted that addition has been made on estimation basis on the ground that the assessee is unable to substantiate expenditure, but no penalty can be levied on the additions made on the basis of estimations. To strengthen his submissions, the ld. AR draws support from the following decisions: i. Hindustan Steel Ltd. Vs. State of Orissa, 83 ITR 26 (SC); ii. Commissioner of Income Tax Vs. Gem Granites, 86 CCH 160 (Mad.); iii. Ajit Kumar Surana Vs. Assistant Commissioner of Income Tax, 39 CCH 138 (Kol-Trib.); iv. Godav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under: 59. As the provision stands, the penalty proceedings can be initiated on various ground set out therein. If the order passed by the Authority categorically records a finding regarding the existence of any said grounds mentioned therein and then penalty proceedings is initiated, in the notice to be issued under Section 274, they could conveniently refer to the said order which contains the satisfaction of the authority which has passed the order. However, if the existence of the conditions could not be discerned from the said order and if it is a case of relying on deeming provision contained in Explanation-1 or in Explanation-1(B), then though penalty proceedings are in the nature of civil liability, in fact, it is penal in nature. In either event, the person who is accused of the conditions mentioned in Section 271 should be made known about the grounds on which they intend imposing penalty on him as the Section 274 makes it clear that assessee has a right to contest such proceedings and should have full opportunity to meet the case of the Department and show that the conditions stipulated in Section 271(1)(c) do not exist as such he is not liable to pay penalty. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the information, facts and materials in the hands of the authority imposing the penalty at the time the order was passed and further discovery of facts subsequent to the imposition of penalty cannot validate the order of penalty which, when passed, was not sustainable. 61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pai reported in [2007] 292 ITR 11 (SC) at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of Manu Engineering Works reported in [1980] 122 ITR 306 (Guj) and the Delhi High Court in the case of CIT v. Virgo Marketing P. Ltd. reported in [2008] 171 Taxman 156, has held th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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