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TMI Blog2016 (6) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... -10 dated 07-03-2011 and 04-03-2011 for theassessment years 2005-06 and 2006-07 respectively against the orders of penalty levied u/s. 271(1) ( c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). ITA No. 921/Kol/2011 A.Y 2005-06 ( by the assessee) 2. In this appeal, the assessee has raised the following ground of appeal:- That the Ld. CIT(A) erred in confirming the imposition of penalty u/s. 271(1) ( c) of the I.Tax Act @ 100% amounting to ₹ 3,56,422/- on the amount of income disclosed u/s. 132(4)and included in the return filed u/s. 153A. The penalty levied is wrong and need to be deleted. ITA No. 922/Kol/2011 A.Y 2006-07 ( by the assessee) 3. In this appeal, the assessee has raised the following ground of appeal:- That the Ld. CIT(A) erred in confirming the imposition of penalty u/s. 271(1) ( c) of the I.Tax Act @ 100% amounting to ₹ 2,29,779/- on the amount of income disclosed u/s. 132(4) and included in the return filed u/s. 153A. The penalty levied is wrong and need to be deleted. 4. Besides above, the appellant assessee has initially raised the following common additional grounds of appeal for both the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 02-06- 2009 for the assessment year 2005-06 i.e under consideration. Thereafter, the AO issued show cause notice to the assessee u/s. 274 r.w.s 271 why the penalty u/s. 271(1) (c) of the Act should not be imposed against the assessee for not recording an amount of ₹ 9,71,298/- stated to have been found in the residence of one Sri. Ravi Agarwala referring to seized document RAD/1 during search operation in books of account and not disclosing in the original return. In response to such penalty notice the assessee submitted that the said additional income above was offered by the assessee claiming as its own and disclosed the same in the return filed u/s. 153A of the Act and which shall be treated as original return filed u/s. 139(1) of the Act. After considering the various submissions of the assessee, the AO was of the view that the assessee concealed particulars of income and not disclosed in the return filed u/s. 139 and accordingly, he imposed penalty of ₹ 3,55,422 ₹ 2,29,779/- for both the assessment years under consideration imposition of penalty u/s. 271(1) ( c) for concealment of particulars of income. Relevant findings of the AO for imposition of pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled u/s. 153A is the only return filed u/e 139(1) of the I.T. Act. As per Explanation 5 to Sec. 27(1) (c) no penalty is leviable if the return is filed u/s. 139(1) of the I.T Act including the additional income. In view of the provisions of Sec. 153A, old returns proceeding relating to the year are abated and new proceeding started with reference to new return filed, which is a return filed under 139 of the I.T. Act, as per Sec.153A(1)(a) of the I.T . Act. In this case during the search seizure proceedings, certain incriminating documents/books of accounts were found which clearly reveals that the assessee had earned income which was not disclosed in the return of income filed by the assessee u/s 139(1) with the I.T. Department. Only when search was conducted and those incriminating documents, unexplained jewellery etc are unearthed in course of search and the assessee was confronted with the same, the assessee had no other option but to make disclosure of incomes. Hence it is obvious that the income filed u/s. 153A was not disclosed voluntarily but directly related to the search took place . Had the search not taken place, the assessee would have never come out with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n existing prior to the insertion of Explanation 5A. The instant case is not a case of any bonafide claim of expenses having been disallowed. As regards intention of the assessee, the concealment of income has been detected in action of search seizure and as such malafide is apparent. In view of the above and the Explanation 5A, the assessee s explanations are not satisfactory. In view of above, I am satisfied that this a fit case for imposition of penalty u/s. 271(1) (c) for concealment of particulars of income in the return filed u/s. 139 and accordingly, an amount of ₹ 3,55,422/- is imposed as penalty u/s. 271(1) (c ) of the I.T Act, 1961. 8. Aggrieved by such order of the AO, the assessee preferred an appeal before the CIT-(A). Before him the assessee reiterated the submissions as made before the AO during the assessment proceeding u/s. 153A as well as penalty proceeding u/s. 271(1) ( c) of the Act. The specific finding of the CIT-(A) was that the assessee concealed the particulars of income as that the undisclosed income as found and declared thereafter u/s. 153A which was not declared in the original return, accordingly, made applicable the Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 'on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particular of his income or furnished inaccurate particulars of such income. 4.2 From the plain reading of the explanation 5A , it is apparent that if any undisclosed income is found or declared after the date of search initiated under section 132 on or after the 1.06.2007 , the assessee will be liable for penalty on the said income/ investment not already declared in the return filed under 139(1) of the Act. In the case under consideration, the assessee had filed return of income for the previous year in question on 19.12.2005. However the income in question was not offered in the said return filed under section 139(1) of the Act. . Hence notwithstanding that such income is declared by him in return of income furnished after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub- section (1) of this section, be deemed to have concealed the particular of his income or furnished inaccurate particulars of such income. Considering above I don t fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause why the penalty shall not be imposed, We find that irrelevant portion of such notice was not struck out by the AO. Therefore, the said notice is not clear whether it was issued for furnishing of inaccurate particulars of income or concealment of particulars of such income. We find that the assessee as relied on the B Bench of Kolkata Tribunal order dated 06-11- 2015 in the case of Suvaprassanna Bhattacharya Vs. ACIT, Kolkata in ITA No. 1303/Kol/2010 for the AY 2006-07 is applicable to the case on hand. The relevant findings in the order of Tribunal are reproduced herein below for better understanding:- 8. The next argument that the show cause notice u/s. 274 of the Act which is in a printed form does not strike out as to whether the penalty is sought to be levied on the for furnishing inaccurate particulars of income or concealing particulars of such income . On this aspect we find that in the show cause notice u/s. 274 of the Act the AO has not struck out the irrelevant part. It is therefore not spell out as to whether the penalty proceedings are sought to be levied for furnishing inaccurate particulars of income or concealing particulars of such income . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quirement of law when the consequences of the assessee not rebutting the initial presumption is serious in nature and he had to pay penalty from 100% to 300% of the tax liability. As the said provisions have to be held to be strictly construed, notice issued under Section 274 should satisfy the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended if the show cause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee. 60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two offences but in such cases the initiation of the penalty proceedings also must be for both the offences. But drawing up penalty proceedings for one offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law. It is needless to point out satisfaction of the existence of the grounds mentioned in Section 271(1)(c) when it is a sine qua non for in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard pro forma without striking of the relevant clauses will lead to an inference as to non-application of mind. The final conclusion of the Hon ble Court was as follows:- 63. In the light of what is stated above, what emerges is as under: a) Penalty under Section 271(1)(c) is a civil liability. b) Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. c) Willful concealment is not an essential ingredient for attracting civil liability. d) Existence of conditions stipulated in Section 271(1)(c) is a sine qua non for initiation of penalty proceedings under Section 271. e) The existence of such conditions should be discernible from the Assessment Order or order of the Appellate Authority or Revisional Authority. f) Even if there is no specific finding regarding the existence of the conditions mentioned in Section 271(1)(c), at least the facts set out in Explanation 1(A) (B) it should be discernible from the said order which would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirement of law. r) The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. s) Taking up of penalty proceedings on 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 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 reassessment cannot be declared as invalid in the penalty proceedings. (emphasis supplied) It is clear from the aforesaid decision that on the facts of the present case t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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