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TMI Blog2017 (4) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to certain Khasras and accordingly on proportionate basis exemption to the extent of Rs. 73,38,805/- has been disallowed as ingredient of clause (c) are fulfilled and satisfied so as to justify imposition of penalty. The said finding is illegal and unjustified. 2. That the ld.CIT(A) has erred in holding that mere disclosure of exempt income in Schedule E-1 to ROI will not prove the bonafidely of the full disclosure. The said finding is illegal and unjustified. 3. That the ld. CIT(A) has erred in holding that the assessee has made false claim of exemption and in view of these facts and circumstances penalty under section 271(1)(c) has rightly been levied and confirming the levy of penalty of Rs. 16,43,892/- imposed under the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supported the orders of the authorities below. 4.2 We have heard the rival contentions, perused the material available on records and gone through the orders of the authorities below. One of the ground is that the initiation of the penalty is not as per the provision of law. It is contended that while issuing the notice for initiating penalty proceeding the assessing officer has not specified the charge whether the notice was for concealment of income or furnishing the inaccurate particulars of income. He drew our attention to Paper Book Page No. 3 to demonstrate that the notice is issued on pre-typed performa. He submitted in this regard the reliance is placed on the judgment of Hon'ble Karnataka High Court in the case of CIT Vs. Manjuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he imposition of penalty even if the tax liability is admitted is not automatic. (k) Even is 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 a opined by the assessing officer in the assessment order. (l) Only when no explanation is offered or the explanation offered is found to be false or when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assesee to contest the said proceedings on the merits. Howeever, 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." In the present case also the notice has been issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under section 271(c). If we accept the contention of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent and distinct proceedings.
4.4 As we observed in the preceding paragraph that the initiation of proceedings by issuing a defective notice is contrary to the view of the Hon'ble Karnataka High Court rendered in the case of Manjunatha (supra) , the imposition of penalty was not justified on merit as well as we are of the considered view that the judgment of the Hon'ble Supreme Court rendered in the case of Reliance Patroproduct (supra) is applicable on the facts of the present case therefore respectively followings the same, the penalty is deleted.
5. In the result, appeal of the assessee in ITA No. 412/JP/2015 is allowed.
Order pronounced in the open court on this 23rd day of March 2017. X X X X Extracts X X X X X X X X Extracts X X X X
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