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TMI Blog2018 (5) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... arly understood what was the purport and import of notice issued under Section 274 r/w.Section 271 of the Act. - Decided against the assessee - T.C. (Appeal).Nos.876 and 877 of 2008 - - - Dated:- 23-4-2018 - T. S. Sivagnanam And N. Seshasayee, JJ. For the Appellant : Mr.R.Vijayaraghavan for M/s.Subbaraya Aiyar Padmanaban and Ramamani Advocates For the Respondent : Mr.Karthik Ranganathan Senior Standing Counsel for Income Tax Department Assisted by Mr.D.Prabu Mukunth Arunkumar and Mr.Vijayakumar Punna Junior Standing Counsel (IT) JUDGMENT T.S.SIVAGNANAM.J., These appeals by the Assessee are directed against the order passed by the Income Tax Appellate Tribunal, Madras C Bench in I.T.A.No.1497/Mds/2003 and I.T.A.No.1498/Mds/2003 for the Assessment Years 1995-96 and 1996-97. 2. These appeals have been admitted on 31.07.2008 on the following substantial questions of law: 1.Whether on the facts and in the circumstances of the case, the Tribunal was right in confirming the levy of penalty under Section 271(1)(c) without appreciating the evidences filed by the appellant? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had entered into the lease transaction by obtaining invoices, making payment directly to a supplier and getting relevant documents that were necessary at that point of time and there was no reason to doubt the genuineness of the transaction. Further it is submitted that the assessee had voluntarily withdrawn the claim of depreciation when it came to know that the transaction was not genuine. Further it is submitted that there is no fraud or negligence on the part of the assessee and the assessee had offered explanation which was neither disproved nor found to be lacking in bonafides. Therefore, it is submitted that the impugned order passed by the Tribunal requires to be interfered and the questions of law be answered in favour of the appellant. 7. Learned counsel placed reliance on the decision of the High Court of Delhi in the case of Commissioner of Income Tax Vs. Jindal Equipments Leasing and Consultancy Services Ltd., reported in (2010) 325 ITR 0087 for the proposition that though the third substantial question of law which has been framed for consideration was not raised earlier, that being a pure question of law, can be allowed to be raised by amendment to the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Hon'ble Surpeme Court, summarized the principles with regard to levy of penalty under Section 271(1)(c) of the Act. It held that penalty under the said Section is a civil liability, mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities, wilful concealment is not an essential ingredient for attracting civil liability, existence of conditions stipulated in Section 271(1)(c) is a sine qua non for initiation of penalty proceedings under Section 271 and the existence of such conditions should be discernible from the Assessment order or order of the Appellate Authority or Revisional Authority, the imposition of Penalty is not automatic, imposition of penalty even if the tax liability is admitted is not automatic and if explanation offered is not substantiated, an order imposing penalty could be passed. Notice proposing to impose penalty should specifically state the grounds mentioned in Section 271(1)(c) and findings recorded in the assessment proceedings insofar as concealment of income and furnishing of inaccurate particulars would not operate as resjudicata in penalty proceedings and it is open to the Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income. 13. The Appellate Authority, who confirmed the order passed by the Assessing Authority, held that there was no asset in existence and the assessee themselves accepted the fact and reversed the claim for depreciation and therefore, the assessee had concealed particulars of its income and furnished inaccurate particulars. The correctness of this order was tested before the Tribunal. The Tribunal by referring to the decision of this Court in the case of Lakshmi Vilas Bank Ltd., Vs. Commissioner of Income Tax reported in (2006) 284 ITR 93 confirmed the order of levying penalty. Thus, if the facts are tested on the anvil of the legal principles as has been stated above, it is not necessary that there should be wilful concealment for attracting a civil liability of penalty under Section 271(1)(c) of the Act. The existence of the condition mentioned under Section 271(1)(c) of the Act are writ large on the face of the order of the Assessing Officer as well as the first appellate authority. The authorities concurrently rejected the explanation offered by the assessee. We are in agreement with the factual findings rendered by the authorities since the petitioner is a leasing com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es issued under Section 274 r/w. Section 271 of the Act are vitiated since it did not specifically state the grounds mentioned in Section 271(1)(c) of the Act. 16. We have perused the notices and we find that the relevant columns have been marked, more particularly, when the case against the assessee is that they have concealed particulars of income and furnished inaccurate particulars of income. Therefore, the contention raised by the assessee is liable to be rejected on facts. That apart, this issue can never be a question of law in the assessees case, as it is purely a question of fact. Apart from that, the assessee had at no earlier point of time raised the plea that on account of a defect in the notice, they were put to prejudice. All violations will not result in nullifying the orders passed by statutory authorities. If the case of the assessee is that they have been put to prejudice and principles of natural justice were violated on account of not being able to submit an effective reply, it would be a different matter. This was never the plea of the assessee either before the Assessing Officer or before the first Appellate Authority or before the Tribunal or before this C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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