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TMI Blog2018 (4) TMI 1351X X X X Extracts X X X X X X X X Extracts X X X X ..... culars of income or for furnishing of inaccurate particulars of income. 2. On the facts and in the circumstances of the case and in law the ld. CIT(A) erred in confirming the penalty u/s 271(1)(c) of I.T. Act, 1961 on the additional income of Rs. 29,01,920/- declared by the assessee in his return of income filed u/s 153A of the Act. 3. The assessee prays for leave to add, to amend, to delete, or modify the all or any grounds of appeal on or before the hearing of appeal." 2. Ground no. 1 is regarding the validity of initiation of proceedings u/s 271(1)(c) of the Act as the AO has not specified the grounds in the show cause notice issued u/s 274 of the Act whether it is for concealment of particulars of income or for furnishing of inaccurate particulars of income. There was search u/s 132 on 22.09.2010 in the case of Shree Ram Group, Jaipur to which the assessee belongs. In response to the notice u/s 153A of the Act the assessee filed his return of income declaring total income of Rs. 30,44,970/- for the assessment year 2009-10 which includes Rs. 29,01,920/- as income surrendered at the time of search. Similarly in the assessment year 2010-11 the assessee in the return of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n dated 06.12.2016 in DB ITA No. 534/2008. Hence, the ld. AR of the assessee has submitted that when the AO has not specified the charge in the show cause notice then the assessee was not given an opportunity to explain and reply to the charge of the Assessing Officer. 4. On the other hand, ld. DR has submitted that the penalty is levied in respect of the surrender income which is undisclosed income of the assessee, therefore, the question of explaining the charge does not arise when the assessee himself has surrendered the income which is nothing but concealment of particulars of income. He has relied upon the orders of the authorities below. 5. We have considered the rival submissions as well as relevant material on record. The issue before us is the validity of show cause notice u/s 274 of the act issued on 31.03.2013. We note that identical notices were issued for both the assessment years and the Assessing Officer has not specified the charge/ground for which the penalty was proposed to be levied u/s 271(1)(C) of the Act. It is pertinent to note that at the time of issue of notice dated 31.03.2013 the Assessing Officer initiated the penalty proceedings for levy of penalty u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s accused of the conditions mentioned in Section 271 should be made known about the grounds on which they intend imposing penalty on him as the Section 274 makes it clear that assessee has a right to contest such proceedings and should have full opportunity to meet the case of the Department and show that the conditions stipulated in Section 271(l)(c) do not exist as such he is not liable to pay penalty. The practice of the Department sending a printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law when the consequences of the assessee not rebutting the initial presumption is serious in nature and he had to pay penalty from 100% to 300% of the tax liability. As the said provisions have to be held to be strictly construed, notice issued under Section 274 should satisfy the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended if the show cause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee. 60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of T. Ashok Pai v. CIT [2007] 292 ITR 11/161 Taxman 340at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of CIT v. Manu Engg. [1980] 122 ITR 306 and the Delhi High Court in the case of CIT v. Virgo Marketing (P.) Ltd. [2008] 171 Taxman 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. INDEPENDENT PROCEEDING 62. The penalty proceedings are distinct from assessment proceedings, and independent therefrom. The assessment 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 im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or attracting civil liability. (d) Existence of conditions stipulated in Section 271(l)(c) is a sine qua non for initiation of penalty proceedings under Section 271. (e) The existence of such conditions should be discernible from the Assessment Order or order of the Appellate Authority or Revisional Authority. (f) Even if there is no specific finding regarding the existence of the conditions mentioned in Section 271(l)(c), at least the facts set out in Explanation 1(A) & (B) it should be discernible from the said order which would by a legal fiction constitute concealment because of deeming provision. (g) Even if these conditions do not exist in the assessment order passed, at least, a direction to initiate proceedings under Section 271(l)(c) is a sine qua non for the Assessment Officer to initiate the proceedings because of the deeming provision contained in Section 1(B). (h) The said deeming provisions are not applicable 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 ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd "furnishing of incorrect particulars" would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, 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." By following the said decision in case of CIT vs. Manjunath Cotton and Ginning Factory (supra) the Hon'ble Karnataka High Court in case of CIT SSA's Emerald Meadows (supra) has again decided this issue in favour of the assessee and against the Revenue. The SLP filed by the Revenue against the said decision of Hon'ble Karnataka High court has been dismissed by the Hon'ble Supreme Court reported in 242 taxman 150. Thus, the decision of Hon'ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory (supra) has not been disturbed by the Hon'ble Supreme Court. We further note that the Hon'ble Jurisdictional High Court in case of Sheveta Construction Company Pvt. Ltd vs. ITO (supra) has considered an identical issue in para 5 to 10 as under:- "5. Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also bound to comply with the principles of natural justice. The Income Tax Officer had merely held that the assessee is guilty of furnishing of inaccurate particulars and not of concealment of income; which finding was arrived at also by the Commissioner of Income Tax and the Income Tax Appellate Tribunal. In the facts and circumstances of the case, there are enough material to show that the action on the part of the appellant may not be said to be such which would attract the penal provision under s. 271(1)(c). For the reasons aforementioned, the impugned judgment cannot be sustained." 7. He contended that while concluding the assessment order the officer must be clear whether it is the concealment of income or furnishing of inaccurate detail. He cannot have both the things. 7.1 However, Mr. Singhi appearing for the department submits that a perusal of the order of penalty makes it amply clear that both the things are fulfilled. In that view of the matter the view taken by the Tribunal is required to be accepted. 8. We have heard Mr. Prakul Khurana and Mr. Anuroop Singhi. 9. Taking into consideration the decision of the Andhra Pradesh High Court which virtually co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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