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TMI Blog2018 (1) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly set aside and the other grounds of appeal on the merits of the penalty order are not adjudicated. - ITA Nos.1739 to 1741/Hyd/2014 - - - Dated:- 25-1-2018 - Smt. P. Madhavi Devi, Judicial Member And Shri S.Rifaur Rahman, Accountant Member For The Assessee : Shri V. Raghavendra Rao For The Revenue : Smt. Suman Malik, DR ORDER Per Smt. P. Madhavi Devi, J.M. All are assessee s appeals for the A.Ys 2007-08 to 2009-10. For the A.Ys 2007-08 2008-09, the assessee is challenging the penalty levied by the AO u/s 271(1)(c) of the Act and confirmed by the CIT (A), while for the A.Y 2009-10, the assessee is in appeal against the penalty levied by the AO u/s 271AAA of the I.T. Act. 2. Brief facts of the case are that the assessee is an individual, and is the Secretary and Trustee of Venkata Sai Educational Society. There was a search and seizure operation in the premises of the assessee as well as the Society on 7.8.2008, during the course of which receipts issued by the assessee to the candidates/parents of students for admission into medical college run by the society have been found and seized. Consequent to the search, the assessments have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiate proceedings u/s 271(1)(c) of the Act. 6. Further, the assessee had also raised additional grounds of appeal that the notice u/s 271(1)(c) was not proper as the AO had not struck off the inappropriate words in the notice and therefore, following the decision of the Hon'ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton Ginning Factory reported in (2013) 395 ITR 565 which has been confirmed by the Hon'ble Supreme Court in the case of CIT Anr vs. M/S SSA'S Emerald Meadows in CC No. 11485/2016 dated 05.8.2016, the penalty orders are liable to be quashed. 7. The learned Counsel for the assessee also submitted that the assessee has voluntarily admitted the income in his hands before the CIT (A) and therefore, there was no furnishing of inaccurate particulars or concealment of income by the assessee. He also referred to the findings of the CIT (A) that the unaccounted receipts were utilized by the assessee for purchase of assets in the name of HUF. He submitted that if the penalty is to be levied, the penalty on such income should be levied in the hands of the HUF and not in the hands of the assessee, the individual. 8. The learned DR, on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the proforma without striking off the irrelevant portion, whereas in the case of the assessee, notice has been issued only for the defaults committed by the assessee. Therefore, according to her, these decisions are not applicable to the case of the assessee. 10. Having regard to the rival contentions and the material on record, we find that the main ground on which the assessee is challenging the initiation of the penalty proceedings u/s 271(1)(c) is that the protective assessment has been made in the hands of the assessee and therefore, the AO could not have been satisfied about the default of the assessee. For the sake of clarity and ready reference, the provisions of section 271(1) are reproduced hereunder: 271 (1) If the Assessing Officer or the Commissioner (Appeals)or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person- ( a) ( b) has failed to comply with a notice under sub-section (2) of section 115WD or under sub-section (2) of section 115WE or under subsection (1) of section 142 or sub-section (2) of section 143or fails to comply with a direction issued under sub-section (2A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has concealed the particulars of income or has furnished inaccurate particulars of such income. Let us now examine the applicability of the case laws relied upon by the assessee to the facts of the case before us. The Hon'ble Calcutta High Court in the case of CIT vs. Super Steel (Sales) Co. (1989) 178 ITR 451 (Cal.), has held that only a person in whose hands, a substantive assessment is made, would be liable for penalty, provided, the conditions precedent for imposition of penalty are satisfied. The Coordinate Bench of the Tribunal at Ahmedabad in the case of Sri Natvarbhai Chaturbhai Patel vs.ACIT (ITA No.707/Ahd/2006, dated 7.5.2010) has held that where the AO makes protective assessment, there could not have been any satisfaction on the part of the AO for initiating penalty proceedings as he was not sure as to in whose hands this income is to be assessed. The Hon'ble Gujarat High Court in the case of Patel Chemical Works vs. AO (2009) 309 ITR 450 (Guj.) was considering the case of an assessee in whose hands an addition was made on account of diversion of profits by the sham transaction with its sister concern. Subsequently, the three sister concerns offered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds for himself and has utilized the funds for acquiring assets for himself and his family members. Further, the assessee in a statement on Oath u/s 132(4) of the Act, had declared undisclosed income in the hands of the promoters including himself, but while filing the return of income u/s 153A, he failed to offer the same to tax in his hands. Therefore, the AO was satisfied that there was furnishing of inaccurate particulars and concealment of income by the assessee at the time of the assessment proceedings itself and therefore, the assessee s contention that, the notice for initiation of the proceedings u/s 271(1)(c) by the AO is not valid, is not sustainable. Though the notice u/s 271(1)(c) was issued after the assessment was completed u/s 143(3) r.w.s. 153A of the Act, the penalty proceedings were concluded only after the protective assessment has been confirmed as a substantive assessment in the hands of the assessee by the CIT (A). Therefore, the case laws relied upon by the assessee are distinguishable on facts and are not applicable to the case of the assessee. As regards the additional ground is concerned, we have perused the notice u/s 271(1)(c) of the Act and find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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