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TMI Blog2020 (8) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... closed holiday on 2nd and 3rd November, 2019 being Saturday and Sunday the assessee could file the present appeal only on 11.11.2019. Thus, the assessee has prayed that the delay of 8 days in filing the appeal may be condoned. Having considered the reasons explained by the assessee as well as facts and circumstances of the case we are of the considered opinion that in the interest of justice the delay of 8 days in filing the present appeal be condoned so that the appeal of the assessee shall be decided on merits instead of technicalities. Accordingly the delay of 8 days in filing the present appeal is condoned. 3. The assessee has raised following grounds:- "1. Whether on the facts and circumstances of the case the Commissioner(appeal) upheld the ITO's order is correct. 2. The body of the assessment order at page 7 penalty proceedings u/s 271(1)(c) of the I.T. Act are separately initiated for furnishing wrong particulars of the Income. 3. Penalty proceedings u/s 271(1)(c) of the I.T. Act are separately initiated for concealment of the particulars of income. 4. In the same assessment order AO is not ascertained that for which finding the penalty u/s 271(1)(c) is initiated. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "30 is applicable ----thus there are two views on the issue, one in favour of the assessee expressed by the Hon'ble Allahabad High Court and the other against the assessee expressed by the Hon'ble Gujarat & Calcutta High Courts. Admittedly, there is no decision rendered by the jurisdictional High Court on this issue. In the given circumstances, following the decision of the Hon'ble Supreme Court in the case of Vegetable Products Ltd. (supra), we hold that where two views are possible on an issue, the view in favour of the assessee has to be preferred. Following the decision of the Hon'ble Allahabad High Court, we uphold the order of the CIT(A)." Welgrow line (India) (P.) Ltd. vs. ACIT in 54 taxmarm,com 117 (Chennai) ACTT vs. M/s Eskay designs in ITA No. 1951/Mds/2012 A.Y. 2009-10 Jitendra Mansukhlal Shah vs. DOT in ITA No. 2293/Mum/2013 dated 4.3.2015. Amritsar ITAT (third member) in the case of HPCL Mittal Energy Ltd. vs. ACIT ITA Nos. 554 &555/Asr/2014 held that The A.O. cannot initiate penalty on the charge of 'concealment of particulars of income', but ultimately find the assessee guilty in penalty order of 'furnishing inaccurate particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies as well as Department. Therefore, there is no dispute regarding the fact that the assessee has understated purchases in the books of account and thereby the source of unaccounted purchases has not been explained by the assessee. The ld. DR has further contended that as regards the validity of initiation of the proceedings the AO has recorded the satisfaction in the assessment order which cannot be a basis for challenging the initiation of the penalty proceedings Section 271(1B) provides that any amount is added or disallowance in the total income of the assessee and the assessment order contains a direction for initiation of proceedings U/s 271(1)(c) of the Act such assessment shall be deemed to constitute satisfaction of the AO for initiation of the penalty proceedings. Therefore, the ld. DR has submitted that recording of satisfaction in the assessment order is in compliance of provisions of Section 271(1B) of the Act. As regard uncertain charges alleged by the assesse the ld. DR has submitted that this issue has been duly considered by the AO in the remand report as well as by the ld. CIT(A) and the Assessing Officer has given a definite finding while passing the penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order does not require any specific charge but the statement of the AO that penalty proceedings U/s 271(1)(c) of the Act are separately initiated is sufficient. Therefore, the satisfaction recorded by the AO in the assessment order shall have no legal implementation as regard the charge for which the penalty is initiated and finally levied. The notice issued by the AO U/s 274 of the Act though states that the penalty proceedings U/s 271(1)(c) of the Act are initiated for furnishing inaccurate particulars of income or concealment of particulars of income. Therefore, the Assessing Officer has not specified the definite charge for initiation of penalty in the notice issued U/s 274 of the Act however, in the penalty order passed U/s 271(1)(c) of the Act the Assessing Officer has given a definite finding as under:- " In view of this it is concluded that the assessee has intentionally concealed his income of Rs. 6,05,536/-. Therefore looking to the facts of the case, I am satisfied that it is fit case of levy of penalty u/s 271(1)(c) of the IT Act. Hence, I impose penalty u/s 271(1)(c) of the IT Act, 1961." Therefore, even if the AO has not mentioned a specific/definite charge for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ).' 13. The effect of this insertion is that when an amount is added or disallowed in an assessment and the order contains a direction for initiation of penalty proceedings u/s. 271(l)(c), it shall be deemed to constitute satisfaction of the AO for initiation of the penalty proceedings. Crux of the new provision is that a mere direction in the assessment order to initiate penalty proceedings under clause (c) is sufficient to conclude that the AO recorded proper satisfaction as to whether the additions/disallowances are 'concealment of particulars of income' or 'furnishing of inaccurate particulars of income' or both. It is incorrect to argue that even after the insertion of sub-section (1B), the AO still needs to specifically record as to whether each item of addition/disallowance is a case of concealment of particulars of income or furnishing of inaccurate particulars of income. Deeming 'satisfaction' under clause (c) in terms of sub-section (1B) means deeming 'proper satisfaction' and 'proper satisfaction' means getting satisfied as to whether it is a case of concealment of particulars of income or furnishing of inaccurate particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage of initiation of penalty proceedings and at the time of passing the penalty order. Is the AO required to specify in the penalty notice/order as to whether it is a case of 'concealment of particulars of income'; or 'furnishing of inaccurate particulars of income'; or both of them, which can be expressed by using the word 'and' between the two expressions. When the AO is satisfied that it is a clear-cut case of concealment of particulars of income, he must specify it so in the notice at the time of initiation of penalty proceedings and also in the penalty order. The AO cannot initiate penalty on the charge of 'concealment of particulars of income', but ultimately find the assessee guilty in the penalty order of 'furnishing inaccurate particulars of income'. In the same manner, he cannot be uncertain in the penalty order as to concealment or furnishing of inaccurate particulars of income by using slash between the two expressions. When the AO is satisfied that it is a clear-cut case of 'furnishing of inaccurate particulars of income', he must again specify it so in the notice at the time of initiation of penalty proceedings and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty should also be imposed on the same ground. Where the basis of the initiation of penalty proceedings is not identical with the ground on which the penalty was imposed, the imposition of penalty is not valid'. 17. In Manu Engg. Works (supra) penalty was imposed by noting: 'that the assessee had concealed its income and/or that it had furnished inaccurate particulars of such income'. Striking down the penalty, the Hon'ble High Court held that: 'it was incumbent upon the IAC to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by the assessee. No such clear-cut finding was reached by the IAC and, on that ground alone, the order of penalty passed by the IAC was liable to be struck down.' 18. In Padma Ram Bharali (supra), the Hon'ble High Court did not sustain penalty levied u/s. 271(l)(c) when: 'the initiation of the penalty proceeding was for concealment of the particulars of income. But the Tribunal finally held that the assessee would be deemed to have concealed the particulars of income or to have furnished inaccurate particul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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