9911796707
TMI Blog2017 (1) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for concealment of income or furnishing of inaccurate particulars of income. The Assessing Officer has issued notice without striking of irrelevant clause in the standard proforma. Since, the notice issued u/s. 274 is vague, the same is invalid and the subsequent proceeding arising therefrom are thus vitiated. See Commissioner of Income Tax Vs. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] has held that notice u/s. 274 of the Act should specifically state the grounds mentioned in section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271(1) are mentioned would not satisfy the requirement of law. - Decided in favour of assessee - ITA No. 1775/PUN/2014 - - - Dated:- 18-1-2017 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri Hari Krishan For The Revenue : Shri Suhas S. Kulkarni ORDER PER VIKAS AWASTHY, JM : This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-I, Thane dated 16-06-2014 for the assessment year 2007-08 upholdin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) vide impugned order confirmed the levy of penalty. Now, the assessee is in second appeal before the Tribunal assailing the findings of Commissioner of Income Tax (Appeals) in confirming the levy of penalty. 3. Shri Hari Krishan appearing on behalf of the assessee submitted that the difference between the market value and the value shown in the books of assessee firm is treated as goodwill. The assessee has claimed ₹ 11,44,680/- as depreciation on goodwill and has written off the same. Originally, Shri Hiralal Rangani (Patel), one of the partners of the assessee firm in his statement recorded on 30-08-2007 had agreed to disclose the amount in the books of the individual partners. However, the said income is not taxable in the hands of partner. In support of his submissions, the ld. AR placed reliance on the following decisions : i. Sri Ramalinga Choodambikai Mills Ltd. Vs. Commissioner of Income Tax, 28 ITR 952 (Madras); ii. Grindwell Norton Ltd. Vs. Addl. Commissioner of Income Tax, 50 ITR (Trib) (S.N.) 7 (Mumbai); iii. Principal Commissioner of Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order, both charges are mentioned as a matter of procedure. The Assessing Officer and Commissioner of Income Tax (Appeals) in penalty proceedings have held that penalty u/s. 271(1)(c) is levied for furnishing inaccurate particulars of income. Thus, there should not be any doubt in the mind of assessee regarding the charge for levy of penalty. The ld. DR further referred to the order of Tribunal dated 30-03-2016 in ITA No. 1079/PN/2011 wherein the Co-ordinate Bench of the Tribunal has upheld the addition on account of writing off of goodwill. The ld. DR submitted that in the assessment order, order levying penalty u/s. 271(1)(c) and the order of First Appellate Authority confirming the levy of penalty are consistent and there is no ambiguity with respect to the charge for levy of penalty. The ld. DR further pointed that penalty cannot be deleted merely on absurd or illogical interpretation of the decisions or provisions of the Act. The ld. DR placed reliance on the decision of Hon ble Delhi High Court in the case of Commissioner of Income Tax Vs. HCIL KALINDEE ARSSPL in ITA 480/2012 decided on 29-07-2013. 5. We have heard the submissions made by the representatives of riv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included both the charges i.e. concealment of income as well as furnishing of inaccurate particulars of income. 8. Notice u/s. 274 r.w.s. 271(1)(c) of the Act was issued to the assessee on 29-12-2009. The relevant contents of the notice issued to the assessee are as under : NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(c) OF THE INCOME TAX ACT, 1961 Date-29/12/2009 To M/s. Mateshwari Enterprises 413/2, 7-8, sector-17, New Panvel. Sir, Whereas in the course of proceedings before me for the assessment year 2007-08 it appears to me that you :- *have concealed the particulars of your income or furnished inaccurate particulars of such income. You are hereby requested to appear before me at Panvel 11.30 A.M. on dt. 18/01/2010 and show cause why an order imposing a penalty on you should not be made under section 271 of the Income-tax Act, 1961. If you do not wish to avail yourself of his opportunity of being heard in person or through authorized representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271(1)(c). Yours faithfully, Sd/- ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly, while issuing notice u/s. 274 of the Act, the charge for which penalty proceedings are initiated should be discernible. The principle of natural justice demands that the assessee should know the charge for levy of penalty u/s. 271(1)(c) which he has to defend in the penalty proceedings. 12. In the present case, a perusal of the assessment order shows that while recording satisfaction for initiating penalty proceedings u/s. 271(1)(c), the Assessing Officer in paragraph 4 of the order has stated that the penalty proceedings are initiated u/s. 271(1)(c) for filing wrong particulars of income and in concluding paragraph of the assessment order he has stated that show cause notice u/s. 274 r.w.s. 271(1)(c) to be issued for concealment of income/furnishing inaccurate particulars of income. This shows that the Assessing Officer is himself not clear whether the penalty is to be levied for furnishing of inaccurate particulars of income or concealment of income. A further perusal of the notice issued u/s. 274 r.w.s. 271(1)(c) which has been reproduced here-in-above further reveal that there is ambiguity in the notice with respect to charge for levy of penalty. It is not clear from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in Section 271 are mentioned would not satisfy requirement 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 men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke 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 proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. 14. The Co-ordinate Bench of the Tribunal in the case of Kanhaiyalal D. jain Vs. The Asstt. Commissioner of Income Tax (supra) had deleted the levy of penalty under similar circumstances by following the decision rendered in the case of Commissioner of Income Tax Vs. Manjunatha Cotton and Ginning Factory (supra) and various other decisions. The relevant extract of the findings of Co-ordinate Bench are as under : 23. However, the question which is raised before us by way of additional ground of appeal is root of start of the proceedings i.e. recording of satisfaction and the issue of notice, which has been challenged by the assessee to be invalid. Applying the ratio laid down by the Hon ble Karnataka High Court in CIT Anr. Vs. Manjunath Cotton and Ginning Factory (supra) and CIT Vs. SSA S Emerald Mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guity makes such notice invalid and proceedings thereafter are to be quashed. 25. The Hon ble Supreme Court in T. Ashok Pai Vs. CIT (supra) had held as under:- 23. Section 271(1)(c) remains a penal statute. The rule of strict construction shall apply thereto. The ingredients for imposing penalty remain the same. The purpose of the Legislature that it is meant to be a deterrent to tax evasion is evidenced by the increase in the quantum of penalty, from 20 per cent under the 1922 Act to 300 per cent in 1985. 24. Concealment of income and furnishing of inaccurate particulars carry different connotations. Concealment refers to a deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppression very or suggestion falsi. 26. Where concealment of income and furnishing of inaccurate particulars of income are two different connotations, then as per provisions of the Act, the satisfaction has to be recorded by the Assessing Officer before initiating penalty proceedings as to under which limb the case of assessee falls. In the present set of facts, the satisfaction as recorded by the Assessing Officer w ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
