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TMI Blog2017 (12) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... determined as a notice issued in violation of principles of natural justice and consequently penalty levied on the strength of such notice deserves to be quashed. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... rties on various dates and agreed to offer equivalent amount as 'undisclosed income' for the FYs 2004-05 to 2007-08, since he was unable to prove the source for advancing such sums. Assessee did not disclose the income which was admitted by him in the post search proceedings or in the return filed by him. Even during the course of assessment proceedings, the assessee was asked to clarify the issue but in the reply the assessee merely furnished a revised cash flow statement wherein he has introduced a sum of ₹ 35 lakhs, which was not reported at the time of recording the statement. This cash flow statement was not accepted by the A.O. as the different set of cash flow statement was drawn by the assessee during the course of post search proceedings. Accordingly, assessment was completed by making certain additions on account of 'undisclosed investment' and penalty proceedings were simultaneously initiated u/s 271(1)(c) of the Act. In response thereto, the assessee filed a reply on 06.05.2010 wherein it was stated that he prudently disclosed the details in the returns filed except for the income admitted during the search. The additional income having been offered with a view to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed in appeal and thereafter the assessee did not file appeal because there is no point in further litigation. Thus, the claim of the assessee that he admitted the income to buy peace was found to be totally incorrect. 10. A.O. observed that as per the provisions of Explanation 5A, if an assessee offers an explanation, which is found to be false or not satisfied, it shall be deemed to represent the income in respect of which particulars have been concealed but, in the instant case there was a concurrent finding of fact that it was undisclosed income and assessee tried to devise a scheme to defeat the Revenue by filing a different cash flow statement during the assessment proceedings. He thus concluded that assessee has consciously concealed the particulars of income on the strength of false explanation and false cash flow statement which implies that the Assessing Officer is of the view that it was not only a case of 'concealment of income' but also 'furnishing of inaccurate particulars of income'. Accordingly, penalty was levied u/s 271(1)(c) of the Act. 11. On an appeal, Ld. CIT(A) confirmed the action of the AO. As could be noticed from the Ld. CIT(A)'s order, the main c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdictional High Court which in turn was based upon the decision of the Hon'ble Supreme Court in the case of CIT vs. M/s. SSA's Emerald Meadows (unreported). Adverting the attention of the Bench to the notice issued by the Assessing Officer it was contended that it was a standard format which was sent to the assessee wherein it was not mentioned whether the assessee was required to respond to the accusation of 'concealment of income' or 'furnishing of inaccurate particulars of income' or 'both'. 14. He also relied upon several decisions on the other grounds urged in the grounds of appeal. 15. Ld Departmental Representative, on the other hand, filed brief written submissions along with case law. The case of the Revenue is that based on the documents seized a detailed statement was recorded which was the basis for initiation of penalty proceedings and therefore, proceedings initiated u/s 153C of the Act cannot be questioned at this stage and consequently initiation of penalty proceedings u/s 271(1)(c) of the Act cannot now be challenged, since the assessee accepted, at the time of recording statement, that he had advanced loans to various parties on various dates and worked out the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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