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TMI Blog2018 (2) TMI 1512X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty notice shows that the charge being made against the assessee qua 271(1)(c) is not firm, shows non-application of mind on the part of the AO, and the vagueness and ambiguity in the notice has thus prejudiced the right of reasonable opportunity to the assessee in as much as the assessee is not made aware as to which of the two charges, he has to submit his defence. Where the factum of non-striking off of the irrelevant clause in the notice has been held as reflective of non-application of mind by the AO and in light of facts and circumstances of the present case and the above discussions, the penalty imposed under section 271(1)(c) is liable to be deleted. - Decided in favour of assessee. - ITA No. 441/JP/2017 - - - Dated:- 21-12-2017 - SHRI KUL BHARAT, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri P.C. Parwal (CA) For The Revenue : Smt. Prithviraj Meena (Addl.CIT) ORDER PER: SHRI VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of Ld. CIT(A)- 01, Jaipur dated 15.03.2017 wherein the assessee has taken following grounds of appeal:- 1. Under the facts and circumstances of the case, the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in absence of the documentary evidence. At the same time, the AO observed that on perusal of the registered sale deed, it is noted that pakka open well, filling and levelling charges, PVC pipe line, water storage tank etc. have been constructed which proves that the assessee would have incurred certain expenses on this items and the expenses so incurred cannot be denied. Considering the discrepancies, the AO held that the working of capital gain filed by the assessee cannot be relied in totality without supporting evidence and he accordingly disallowed 10% of the total indexed cost of ₹ 54,15,793/- and worked out a disallowance of ₹ 541,579. Subsequently in appeal before the ld. CIT(A), the said disallowance was deleted by the ld. CIT(A). 4. In light of the same, one of the reasons for the levy of penalty under the impunged penalty order u/s 271(1)(c) relates to difference between the cost of acquisition as claimed by the assessee in the return of income amounting to ₹ 1,26,40,000 and cost of acquisition amounting to ₹ 54,15,793 as per the revised computation of income which has been filed during the course of assessment proceedings, and the latter be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al gain without any basis which was subsequently revised to ₹ 68,91,723/- and even in revised computation of income, the appellant claim deduction u/s 54F at a higher amount which was not permissible in law. These facts clearly prove that the appellant has furnished inaccurate particulars of income. It was further held that the revised computation of income was filed by the assessee only when the same was detected by the AO and it cannot be treated as voluntary as claimed by the assessee. It was further held that the appellant had no intention to declare its true income in the return of income filed it. It was further held that the appellant has not brought on record any material which proves that in its return of income, it declared LTCG of ₹ 3,85,600/- or claimed higher deduction u/s 54F of the Act accidently or by mistake. Further the ld. CIT(A) referred to the various decisions including decision of Hon ble Supreme Court in case of Mak Data (P) Ltd. vs. CIT [2013] 358 ITR 593, Hon ble Bombay High Court in case of Mahesh N. Thakkar vs. ACIT [2015] 59 taxmann.com 272 (Bom). He accordingly confirmed the imposition of penalty by the AO u/s 271(1)(c) of the Act. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of this decision as contained in para 60 to 63 of the order is reproduced as under:- 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 mentioned in Section 271(1)(c) when it is a sine qua non for initiation or proceedings, the penalty proceedings should be confined only to those grounds and the said grounds have to be specifically stated so that the assessee would have the opportunity to meet those grounds. After, he places his version and tries to substantiate his claim, if at all, penalty is to be imposed, it should be imposed only on the grounds on which he is called upon to answer. It is not open to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceedings are taxing proceedings. The proceedings for imposition of penalty though emanating from proceedings of assessment are independent and separate aspects of the proceeding, Separate provision is made for the imposition of penalty and separate notices of demand are made for recovery of tax and amount of penalty. Also separate appeal is provided against order of imposition of penalty. Above all, normally, assessment proceedings must precede penalty proceedings. Assessee is entitled to submit fresh evidence in the course of penalty proceedings. It is because penalty proceedings are independent proceedings. The assessee cannot question the assessment jurisdiction in penalty proceedings. Jurisdiction under penalty proceedings can only be limited to the issue of penalty, so that validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter in penalty proceedings. It is not possible to give a finding that the reassessment is invalid in such penalty proceedings. Clearly, there is no identity between the assessment proceedings and the penalty proceedings. The latter are separate proceedings that may, in some cases, follow a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the orders passed by the Commissioner of Appeals and the Commissioner. i) The imposition of penalty is not automatic. j) Imposition of penalty even if the tax liability is admitted is not automatic. k) Even if 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 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 as opined by the assessing officer in the assessment order. 1) Only when no explanation is offered or the explanation offered is found to be false or when the assessee fails to prove that the explanation offered is not bonafide, an order imposing penalty could be passed. m) If the explanation offered, even though not substantiated by the assessee, but is found to be bonafide and all facts relating to the same and material to the computation of his total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of mind- In any case as there is no specific ground, hence there would be breach of principles of natural justice and ultimately the order imposing penalty even otherwise also cannot be sustained. Ms. Sandhya Gadkari Sharma Vs. DCIT (2016) 142 DTR 129 (Mum): It is incumbent upon the AO to specify whether the penalty u/s 271(1)(c) is being levied for concealment of income or for furnishing inaccurate particulars of income. In the absence of specific charge, levy of penalty would be bad in law. Therefore, in the absence of specific mention in the notice u/s 274 as to whether the penalty proceedings are initiated for concealment of income or furnishing inaccurate particulars of income, the penalty levied is illegal and bad in law. 10. It was further submitted that so far as levy of penalty on merit is concerned, the assessee has disclosed all the facts and particulars in assessment proceedings and none of these particulars were found to be incorrect. The difference in the gain on sale of land has arisen on account of difference in value of cost of acquisition of land and deduction claimed u/s 54F. While filing the original return, assessee estimated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee cannot be held to be guilty of furnishing inaccurate particulars of income or concealment of income. 12. It was further submitted that it is a settled law that where a claim for deduction is made under a bona-fide belief in respect of which full particulars were filed with the return, the disallowance of such claim which was ultimately held to be a wrong claim would not mean that assessee has furnished inaccurate particulars of income so as to warrant the levy of penalty. For this, reliance was placed on the following cases:- CIT Vs. Reliance Petroproducts Pvt. Ltd. 322 ITR 158 (SC) : A glance at the provisions of section 271(1)(c) of the Income-tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word particulars used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticals Pvt. Ltd. (2015) 125 DTR 236 (Chd.) (Trib.) : Assessee having made bona fide claim of deduction in the return and disclosed the entire facts, it cannot be held that the assessee has concealed particulars of income or filed inaccurate particulars of income simply because the revenue authorities did not accept the assessee s claim and made additions. Therefore, penalty u/s 271(1)(c) could not be levied. Meridian Impex Vs. ACIT (2014) 107 DTR 89/149 ITD 29 (Rajkot) (Trib.) (TM): The assessee having made claim for deduction u/s 80IB on the basis of its legal perception, furnishing all the material facts relevant to the computation of total income and later withdrawn the claim during the assessment proceedings after discovering that it was not admissible, it was a bona fide claim and did not amount to filing of inaccurate particulars of income. Therefore, assessee is not liable for penalty u/s 271(1)(c). 13. It was further submitted that the cases reported at 358 ITR 593 (SC), 61 taxmann.com 363 (Chd.) (Trib.), 64 taxmann.com 91 (Cal.), 70 taxmann.com 175 (SC) relied by the Ld. CIT(A) are on different facts as evident from the gist of the cases mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing inaccurate particulars of income. The notice doesn t specify the exact charge against the assessee as to whether it relates to concealing the particulars of income or furnishing inaccurate particulars of income. The subsequent notice dated 17.08.2015 is against silent on the exact charge against the assessee. It is a settled position in law that the imposition of penalty under section 271(1)(c) is invited when the conditions specified therein are satisfied and further, the two expressions concealing the particulars of income and furnishing inaccurate particulars of income denote different connotations. It is therefore imperative that the assessee be made aware as to which of the two charges, he is required to submit his defence and supportive arguments. In the instant case, as we have noted above, the notice talks about both the charges and it doesn t convey to the assessee as to which charge he has to respond. The notice thus demonstrate non-application of mind on the part of the AO. Further, we refer to the assessment order where, after discussing the issue relating to computation of capital gains, the AO held that by showing less capital gains, the assessee has furnishe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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