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TMI Blog2019 (7) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Appellant : Shri Manish Tiwari, C.A. For the Respondent : Shri Sankar Halder, JCIT, Sr. D.R ORDER PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) :- This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)-4, Kolkata dated 29.03.2019 and the solitary issue involved therein relates to the imposition of penalty of ₹ 18.18 crores under section 271(1)(c) of the Income Tax Act, 1961. 2. The assessee in the present case is a Company, which is engaged in the business of Civil Construction and other allied activities as well as letting out of heavy machinery. The return of income for the year under consideration was filed by it on 30.09.2012 declaring total income of ₹ 74,43,596/-. In the assessment completed under section 143(3) vide an order dated 30.03.2015, the income of the assessee from Civil Construction was determined by the Assessing Officer on estimated basis at ₹ 1,33,89,565/- by applying a net profit rate of 8%. He added other income of ₹ 2,60,949/- to the business income so estimated and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputing the amount of penalty under section 271(1)(c) wrongly at ₹ 18.18 crores, the ld. Counsel for the assessee has raised a preliminary issue before us challenging the very initiation of the penalty proceedings by the authorities below under section 271(1)(c) on the ground that in the absence of any specific mention in the show-cause notice issued under section 274 of the Act for the year under consideration by the authorities below as to whether the asseessee is guilty of having furnished inaccurate particulars of income or of having concealed particulars of such income , the initiation of penalty proceedings itself was bad in law and the penalty order passed in pursuance thereof is liable to be quashed being invalid. He has invited our attention to the relevant penalty notices to point out that the irrelevant portion, viz. furnished inaccurate particulars of income or concealed particulars of such income was not struck off either by the Assessing Officer or even by the ld. CIT(Appeals). It is observed that the Coordinate Bench of this Tribunal in the case of Suvaprasanna Bhattacharya vs.- ACIT (in ITA No. 1303/KOL/2010) cited by the ld. Counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a finding regarding the existence of any said grounds mentioned therein and then penalty proceedings is initiated, in the notice to be issued under Section 274, they could conveniently refer to the said order which contains the satisfaction of the authority which has passed the order. However, if the existence of the conditions could not be discerned from the said order and if it is a case of relying on deeming provision contained in Explanation-1 or in Explanation-1(B), then though penalty proceedings are in the nature of civil liability, in fact, it is penal in nature. In either event, the person who is 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(1)(c) do not exist as such he is not liable to pay penalty. The practice of the Department sending a printed farm where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law when the consequences of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the imposition of penalty cannot validate the order of penalty which, when passed, was not sustainable. 61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pai reported in 292 ITR 11 at 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 MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 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 inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. l) 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 bona fide, an order imposing penalty could be passed. m) If the explanation offered, even though not substantiated by the assessee, but is found to be bona fide and all facts relating to the same and material to the computation of his total income have been disclosed by him, no penalty could be imposed. n) The direction referred to in Explanation IB to Section 271 of the Act should be clear and without any ambiguity. o) If the Assessing Officer has not recorded any satisfaction or has not issued any direction to initiate penalty proceedings, in appeal, if the appellate authority records satisfaction, then the penalty proceedings have to be initiated by the appellate authority and not the Assessing Authority. p) Notice under Section 274 of the Act should specifically sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of CIT Another vs.- Manjunatha Cotton Ginning Factory reported in 359 ITR 565 is squarely applicable in the present case. It is also noted that a similar view has been taken by the Hon ble Calcutta High Court in the case of Principal CIT vs.- Bijoy Kr. Agarwal (ITAT No. 272 of 2017 dated 02.04.2019), wherein the decision of the Tribunal cancelling the penalty imposed under section 271(1)(c) was upheld by the Hon ble Jurisdictional High Court holding that the notice issued under section 271(1)(c) without specifying which of the two contraventions, the assessee is guilty of was defective and the penalty imposed in pursuance of such defective notice was not sustainable. To arrive at this conclusion, Hon ble Calcutta High Court relied on the decision of Amrit Foods vs.- Commissioner of Central Excise UP reported in (2005) 13 SCC 419 as well as their own decision in the case of Principal CIT vs. Dr. Murari Mohan Koley (ITAT No. 306 of 2017 dated 18.07.2018). The issue raised by the assessee in this appeal thus is squarely covered by the said judicial pronouncements including the decision of the Hon ble Jurisdictional High Court and respectfully following t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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