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TMI Blog2016 (10) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... Aravind Kumar, JJ. For the Appellant : Sri. P. Dinesh For Sri. S. Parthasarathi For the Respondent : Sri. K. V. Aravind, Advocate JUDGMENT Appellant assessee has preferred the present appeal. However, learned counsel appearing for the appellant after some arguments did not press question Nos.1 and 2 and hence, only question No.3 is pressed, which reads as under: Whether in law, the ITAT is justified in confirming the levy of penalty when, admittedly the notice of the Respondent u/s.271(1)(c) of the Act dated 29.06.2009 was clearly contrary to the decision of this Hon ble Court reported in CIT vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Kar.)? 2. We have heard Mr. P. Dinesha, learned counsel appearing for the appellant assessee as well as Mr.K.V.Aravind, learned counsel appearing for the respondent revenue for final disposal of the appeal. Hence, appeal is admitted and finally heard. 3. The only aspect to be considered in the present appeal is the order for imposition of penalty under Section 271 (1)(c) of the Act and whether such penalty could survive in view of the decision of this Court in case of COMMISSIONER OF INCOME-T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation is bona fide and that all the facts relating to the same and material to the computation of his total income have not been disclosed by him, for the purposes of section 271(1)(c) of the Act, the amount so added or disallowed in computing the assessee s total income is deemed to represent the concealed income. It is for the assessee to furnish material to establish that the assessee has not concealed income or has not furnished inaccurate particulars of income. In the absence of any such evidence, the presumption of concealment of income or furnishing of inaccurate particulars of income gets sustained. The decision in the case of Manjunatha Cotton Ginning Factory (supra) of the Hon ble Karnataka High Court, cited by the assessee, also upholds this view. 6.4.3 The judicial decisions cited by the assessee do not support the facts of the assessee s case and do not come to its rescue. In the case of Careers Education Infotech (supra), cited by the assessee, the penalty levied was deleted on the ground that the Tribunal had recorded a categorical finding that there was no material to infer concealment of income or furnishing of inaccurate particulars of income and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee s contention. We are pained to note that the Tribunal completely ignored the assessment order which was not based on any concession from the assessee. Concealment of income in the return filed by the assessee is a glaring fact in the instant case. It is not possible to infer any agreement by the Revenue, either in clear terms or by necessary implication, to act on the basis of the assessee s letter. Assessee has to thank himself that the ITOO levied the minimum penalty only. In the case on hand also, the levy of penalty has its origin in the return of income filed by the assessee and the inability of the assessee to furnish evidence to support the claim made in the return of income and which has no relation whatsoever to any agreement between revenue and the assessee on this point. 6.4.7 The cited decision of Gem Granites (supra) of the Hon ble High Court of Madras also, in a way goes against the assessee. In that case, the penalty was cancelled because the assessee had given a cogent explanation and therefore discharged the onus upon it. In the case on hand, however, the assessee has not given any explanation supported by material evidence to substantiate the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had observed at paragraph 63 as under: 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) Ever 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) 1(B) it should be discernible from the said order which would by a legal fiction constitute concealment because of deeming provision. (g) Even if these conditions do not exist in the assessment order passed, at least, a direction to initiate proceedings under Section 271(l)(c) is a sine qua non for the Assessment Officer to initiate the proceedings b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imb 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. 8. We are not required to consider the other contingencies for examination of legality and validity of the penalty under Section 271(1)(c) of the Act, but clauses (p), (q) (r) of the above referred observations are required to be considered. 9. As per the above referred decision of this Court, the notice would have to specifically state the ground mentioned in Section 271 (1)(c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of assessment, the matter might stand on a different footing. In any case, where notice for imposition of penalty under Section 271(1)(c) of the Act was already there on record and when the Tribunal was to examine the applicability of this Court decision in the case of M/s.Manjunatha Cotton and Ginning Factory (supra) and the law laid down, it was a case where the contention ought to have been considered and examined. As observed by us herein above, the decision in the case of M/s.Manjunatha Cotton and Ginning Factory (supra), would apply and if the notice is found to be illegal and is found to be unsustainable in law and the consequences would be that there is breach of natural justice. Hence, the ultimate order for imposition of penalty cannot be sustained. 14. In view of the aforesaid observations and discussions, the question is answered in favour of the assessee, against the revenue. It is held that the impugned order of the Tribunal in the main appeal as well as in the M.A.No.62/BANG/15 insofar as it relates to not interfering with the order for imposition of penalty is set-aside. It is further observed and declared that as the question is answered in favour of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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