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TMI Blog2019 (9) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... the other arguments on merits put forth by the Assessee. - Decided in favour of assessee. - ITA No.914/Bang/2019 - - - Dated:- 20-9-2019 - Shri N.V. Vasudevan, Vice President And Shri Vikram Singh Yadav, Accountant Membe For the Appellant : Shri C. Ramesh, CA For the Respondent : Shri Sunil Kumar Agarwal, Addl.CIT(DR)(ITAT) Bengaluru ORDER PER N.V. VASUDEVAN, VICE PRESIDENT This is an appeal by the Assessee against the order dated 21.02.2019 of the CIT(Appeals)-3, Bengaluru relating to assessment year 2011-12. 2. In this appeal the Assessee has challenged the order of the CIT(A) whereby the CIT(A) confirmed the order of the AO imposing penalty on the Assessee u/s.271(1)(c) of the Income Tax Act, 1961 (the Act). 3. The facts and circumstances under which penalty was imposed on the Assessee by the AO are that the Assessee who is an individual and engaged in the business of real estate, filed his return of income for AY 2011-12 declaring total income of ₹ 3,90,80,940/-. An order of assessment u/s.143(3) was passed by the AO wherein, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the show-cause notice issued u/s.274 of the Act for all the aforesaid AYs 2002-03 to 2006-07. The AO in the said show cause notice has not struck off the irrelevant portion as to whether the charge against the Assessee is concealing particulars of income or furnishing of inaccurate particulars of income . 7. The learned DR relied on the order of the CIT(A). He placed reliance on the decision of the Hon ble ITAT Bangalore Bench in the case of Shri P.M.Abdulla Vs. ITO ITA No.1223 1224/Bang/2012 order dated 17.10.2016 taking a view that absence of specific mention in the show cause notice u/s.274 of the Act about the charge u/s.271(1)(c ) of the Act is not fatal to levy of penalty u/s.271(1)( c) of the Act. In coming to the aforesaid conclusion the Bench followed decision of Hon ble Karnataka High Court in the case of CIT Vs. Sri Durga Enterprises (2014) Taxmann.com 442 (Karnataka) . He also relied on a decision of the Bangalore ITAT in the case of Jayson Infrastructure India Ltd . 8. 7. We have considered the rival submissions. The Hon ble Karnataka High Court in the case of CIT Anr. v. Manjunatha Cotton and Ginning Factory, 359 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued 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 assessee would have the opportunity to meet those grounds. After, he places his version ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ma without striking of the relevant clauses will lead to an inference as to nonapplication of mind. 9. 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 would by a legal fiction constitute concealment because of deeming provision. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The assessment or reassessment cannot be declared as invalid in the penalty pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision rendered in the context of Sec.148 of the Act in our view is not relevant in the present case. The same reasoning would apply to the decision of the ITAT Bangalore in the case of Jayson Infrastructure India Ltd. (supra). 12. We have already observed that the show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present cases cannot be sustained and the same is directed to be cancelled. In view of the above conclusion, we refrain ourselves from dealing with the other arguments on merits put forth by the Assessee. 13. In the result, the appeal is allowed. Pronounced in the open court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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