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TMI Blog2020 (2) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... aka High Court rendered in the case of CIT vs. Manjunath Cotton Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT ] is squarely applicable in the present case because learned DR of the revenue could not point out any difference in facts. We find that in each of the notices issued by the AO under section 274, the AO is alleging that the assessee has concealed the particulars of his income or has furnished inaccurate particulars of such income. Hence it is seen that the allegation is vague. Notice u/s 274 should specifically state the grounds mentioned in section 271 (1) (c ) i.e. whether it is for concealment of income or for furnishing of inaccurate particulars of income and clause q) specifically states that Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law. Clause r) specifically states that 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 Penalty imposed by the AO u/s 271 AAB - existence of undisclosed income - Neither in the assessment order nor in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y. 2010 11, ₹ 150,000/- in A. Y. 2011 12, ₹ 150,000/- in A. Y. 2012 13, ₹ 72,225/- in A. Y. 2013 14 and 82,550/- in A. Y. 2014 15. 3. It was submitted by the learned AR of the assessee that the assessee is a Civil Contractor following Project Completion Method and because of search and at the instance of the search party, the assessee accepted to recognise the revenue on partial completion and accordingly, the turnover was recognised and return was filed. As per Project Completion method, there was no turnover in any of these years as was being followed by the assessee. It was also submitted that there is no books and accounts prescribed under Rule 6F (1) for Civil Contractor and because of these facts, in these years, the assessee was not required as per law to maintain any books of accounts and in the absence of books of accounts, there cannot be tax audit requirement u/s 44AB. He placed reliance on the tribunal order rendered in the case of K. V. Ramachandran vs. DCIT in ITA No. 104/Coch/2013 dated 26.07.2013 and submitted a copy of this tribunal order. He pointed out that in that case also, the assessee was a civil contractor and the tribunal gave a finding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not point out any difference in facts. We find that in each of the notices issued by the AO under section 274, the AO is alleging that the assessee has concealed the particulars of his income or has furnished inaccurate particulars of such income. Hence it is seen that the allegation is vague. Para 63 of this judgment is relevant because it contains the conclusion and hence, we reproduce it as under:- CONCLUSION 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 Appellare Authority or Revisional Authority. f) Ever if there is no specific finding regarding the existence of the cordrtions mentioned in Section 271(1)(c), at least the facts set out in Explanation 1(A) (B) it should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 proceedings. 7. Clause p) of this Para reproduced above specifically states that Notice u/s 274 of I T Act should specifically state the grounds mentioned in section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome furnished for the specified previous year; and (B) pays the tax, together with interest, if any, in respect of the undisclosed income; (c) a sum computed at the rate of sixty per cent of the undisclosed income of the specified previous year, if it is not covered by the provisions of clauses (a) and (b). (1A) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the date on which the Taxation Laws (Second Amendment) Bill, 2016 receives the assent of the President, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,- (a) a sum computed at the rate of thirty per cent. of the undisclosed income of the specified previous year, if the assessee- (i) in the course of the search, in a statement under subsection (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) on or before the specified date- (A) pays the tax, together with interest, if any, in respect of the undisclosed income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee falls under clause (a) of sub section (1) of section 271AAB of I T Act. As per the provisions of this clause as reproduced above, this is the pre-condition that such assessee in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived. Neither in the assessment order nor in the penalty order, this fact is pointed out by the AO that any statement was recorded u/s 132 (4) and some undisclosed income is admitted by the assessee in the same and the assessee has specified the manner in which such income has been derived. 10. Moreover, this is also an argument of the learned AR of the assessee in the written submissions filed by him before us that on the date of search, due date of filing return of income u/s 139 (1) for A. Y. 2013 14 had not expired because the search took place on 12.09.2013 and hence, there cannot be an allegation about existence of undisclosed income at any time before expiry of due date of filing return of income u/s 139 (1) on the basis of assumption that in the absence of search, the assessee would not have disclosed income on account of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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