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TMI Blog2017 (5) TMI 1401X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was found against the assessee and the addition being based on estimation, there is no merit in the levy of penalty u/s 271(1)(c) of the Act. Accordingly, we direct the Assessing Officer to delete the penalty levied for concealment u/s 271(1)(c) of the Act.- Decided in favour of assessee. - ITA No.1336-1337/Kol/2014 - - - Dated:- 26-5-2017 - Shri Waseem Ahmed, Accountant Member, And Shri Partha Sarathi Chowdhury, Judicial Member For The Assessee : Shri Manish Tiwari, FCA For The Revenue : Shri Amitava Bhattacharya, JCIT-SR-DR ORDER PER Waseem Ahmed, Accountant Member:- Both appeals by the assessee are directed against the different orders of Commissioner of Income Tax (Appeals)-XX, Kolkata with even dates i.e. 05.03.2014. Assessments were framed by ITO/Tax Recovery Officer Ward-36(1), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide their orders dated 26.12.2007 30.12.2008 for assessment years 2005-06 2006-08 respectively. The penalty levied by the Assessing Officer vide his orders dated 25.06.2010 and 21.05.2010 u/s 271(1)(c) of the Act Shri Manish Tiwari, Ld. Authorized Representative appeared on beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the other hand, the ld. DR submitted that the recording of initiation of penalty proceedings u/s 271(1)(c) of the Act is sufficient enough to satisfy the requirement of the compliance of law. He vehemently relied on the order of Authorities Below. 4. We have heard rival contentions of both the parties and perused the materials available on record. We find that the notice issued u/s 274 of the Act by the AO for levying of the penalty is defective in so far it does not spell out the specific charge for penalty. The specific charge for the penalty whether it is levied for the concealment or furnishing of inaccurate particulars of income must emanate from the penalty notice. In the absence of specific charge in the notice, the several courts have decided the issue in favour of assessee including the Jurisdictional High Court which is binding on us. In this regard we guidance support from the judgment of Hon ble High court of Karnataka in the case of CIT Vs. Manjunatha Cotton Ginning Factory reported in 359 ITR 565. The relevant is of the judgment is reproduced below:- Penalty u/s 271(1)(c) is a civil liability, mens rea is not an essential element for imposing penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o initiate penalty proceedings, in appeal, if the appellate authority records satisfaction, then the penalty proceedings have to be initiated by the appellate authority and not the Assessing Authority. 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 ground mentioned in Section 271 are mentioned would not satisfy requirement of law. 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. Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law. 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. The findings recorded in the assessment proceedings in so far as concealment of income and furnishing of incorrect particulars woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebt after the debt had been written off could never be a ground for initiating penal proceedings. Before initiating the penal proceedings the Assessing Officer is required to be satisfied as to whether any income has been concealed or any inadequate particulars have been furnished. Similarly we rely in the order of Hon ble jurisdictional High Court in the case of CIT Vs. Arti Sons , in GA. No. 2682 of 2014 , ITAT 129 of 2014 dated 10.09.2014 where it was held as under : Heard Md. Dhudhoria, learned advocate for the appellant. Since we fin d from the orders of the assessing officer or the CIT that there is no allegation against the assessee for concealment of particulars of income or had furnished inaccurate particulars of such income, we are of the view that the learned Tribunal was justified in passing the order under challenge. Therefore, the application and appeal are dismissed. We also find that the Revenue has filed the SLP No. 5281/2016 before the Hon ble Supreme Court against the judgment of the Hon ble High Court in the case of CIT Vs. Manjunatha Cotton Ginning Factory 359 ITR 565 (SC) which was dismissed as under : We do not find any merit in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit by applying @ 2.8% of the total turnover after rejecting the books of accounts which was reduced by the Ld CIT(A). Penalty proceedings were initiated u/s 271(1)(c) of the Act. After the appeal of the assessee was decided by the Ld. CIT(A) where the Assessing Officer held that the assessee has furnished inaccurate particulars of income and accordingly levied penalty u/s 271(1)(c) of the Act at ₹ 1,04,593/- i.e. @ 100% of the amount of tax sought to be evaded. The Ld. CIT(A) confirmed the same as the assessee failed to appear before him. 8. We have heard the rival contentions and perused the record. In the instant case the penalty u/s 271(1)(c) of the Act is leviable in cases where the assessee had either concealed its income or furnished inaccurate particulars of income. In the facts of the present case before us, the penalty u/s 271(1)(c) of the Act has been levied for furnishing of inaccurate particulars of income on account of low GP ratio declared by the assessee which was subsequently reduced by the ld. CIT(A). The issue arising in the present appeal before us is whether in such circumstances the assessee is liable to levy of penalty u/s 271(1)(c) of the Act ..... 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