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TMI Blog2019 (8) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 22.05.2018, whereby he confirmed the penalty of ₹ 1,23,380/- imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961. 2. The assessee in the present case is an individual, who is engaged in the business of trading in Rice Bran. The return of income for the year under consideration was filed by him on 29.03.2010 declaring total income of ₹ 4,63,625/-. A search and seizure action under section 132 was conducted in the case of various persons belonging to Utsav Group including the assessee on 16.09.2009. Consequent upon the said action, a notice under section 153A was issued by the Assessing Officer on 26.02.2010, in response to which the return of income for the year under consideration was filed by the assessee on 07.05.2010 declaring total income of ₹ 8,62,911/-. In the assessment completed under section 153A/143(3) of the Act vide an order dated 31.12.2011, the income returned by the assessee at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing penalty under section 271(1)(c) was held to be invalid by the Tribunal relying on the decision of the Hon ble Karnataka High Court in the case of CIT Another vs.- Manjunatha Cotton Ginning Factory reported in 359 ITR 565 after discussing the proposition laid down therein in great detail in paragraph no. 8 to 8.2 of its order dated 06.11.2015, which read as under:- 8. The next argument that the show cause notice u/s.274 of the Act which is in a printed form does not strike out as to whether the penalty is sought to be levied on the for furnishing inaccurate particulars of income or concealing particulars of such income . On this aspect we find that in the show cause notice u/s.274 of the Act the AO has not struck out the irrelevant part. It is therefore not spelt out as to whether the penalty proceedings are sought to be levied for furnishing inaccurate particulars of income or concealing particulars of such income . 8.1 The Hon ble Karnataka High Court in the case of CIT Anr. v. Manjunatha Cotton and Ginning Factory, 359 ITR 565 (Karn), has held that notice u/s. 274 of the Act should specifically state as to wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar is the case for furnishing inaccurate particulars of income. The standard pro forma without striking of the relevant clauses will lead to an inference as to non-application of mind. The final conclusion of the Hon ble Court was as follows:- 63. In the light of what is stated above, what emerges is as under: a) Penalty under Section 271(1)(c) is a civil liability. b) Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. c) Willful concealment is not an essential ingredient for attracting civil liability. d) Existence of conditions stipulated in Section 271(1)(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(1)(c), at least the facts set out in Explanation 1(A) (B) it should be discernible from the said order which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticulars of income q) Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law. r) The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. s) Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law. t) The penalty proceedings are distinct from the assessment proceedings. The proceedings for imposition of penalty though emanate from proceedings of assessment, it is independent and separate aspect of the proceedings. u) The findings recorded in the assessment proceedings in so far as concealment of income and 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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