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TMI Blog2019 (7) TMI 1682X X X X Extracts X X X X X X X X Extracts X X X X ..... ishing inaccurate particulars of such income disabling it to meet with the case of the Assessing Officer. There are a catena of judgments highlighting the necessity for identifying the charge for which the assessee is being visited and in all those decisions, Hon'ble Courts have repeatedly held that where the jurisdictional notice is vague, similar to the one in the present case, the consequent levy cannot be sustained. No merit for the penalty so imposed, accordingly, AO is directed to delete the penalty so imposed u/s. 271(1)(c) of Act. - Decided in favour of assessee. - ITA No. 424 to 426/JP/2016, ITA No. 27 & 28/JP/2015 - - - Dated:- 15-7-2019 - SHRI RAMESH C SHARMA, AM AND SHRI VIJAY PAL RAO, JM For the Assessee : Shri Mahendra Gargieya Shri F. Rehman (Advs.) For the Revenue : Shri K.C. Meena (Addl.CIT) ORDER PER: R.C. SHARMA, A.M. These are the appeals filed by the assessee against the separate orders of ld.CIT(A)-4, Jaipur dated 02/02/2016, 14/10/2014 and 15/10/2014 respectively for the A.Y. 2005-06 to 2009-10 in the matter of imposition of penalty U/s 271(1)(c) of the Income Tax Act, 1961 (in short, the Act). 2. In all these appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the AO has levied the impugned penalties in all the other years only only on the basis of findings recorded by the AO in the assessment orders. It is by now well settled that assessment and penalty proceedings are separate and distinct from each other. The order imposing penalty is quasi-criminal in nature and, thus, the burden lay on the department to establish that the assessee had concealed his income. Since the burden of proof in penalty proceeding varies from that in the assessment proceeding, a finding in the assessment proceeding that a particular receipt is income or that a deduction has wrongly been claimed intentionally, can t automatically be adopted, though a finding in the assessment proceedings constitutes good evidence in the penalty proceeding. In the penalty proceedings, thus, the AO is required to bring positive material showing intentional concealment. Also, therefore, all the evidences filed explanation submitted require a consideration afresh. The basic difference between the assessment proceedings and in the penalty proceedings is that whereas in the penalty proceedings, the evidence has to be again evaluated differently and with a view to conclusively ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the assessee guilty of another limb is bad in law. 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. 8. Further reliance was placed on the following judicial pronouncements: (i) Inderjeet Singh Damania vs. ACIT in ITA No. 5743/Del/2015 dated 31.10.2017, it was held as under: 5.1 The Hon ble Supreme Court has reiterated the law in case of Dilip N.Shroff v. Jt. CIT 291 ITR 519 by holding in Para 62 that finding in assessment proceedings cannot automatically be adopted in penalty proceedings and the authorities have to consider the matter afresh from different angle. (ii) In Dilip N.Shroff v. Jt. CIT 291 ITR 519 (SC), it was held as under: The order imposing penalty is quasi-criminal in nature and, thus, burden lies on the department to establish that the assessee had concealed his income. Since burden of proof in penalty proceedings varies from that in the assessment proceeding, a finding in an assessment proceeding that a particular receipt is income cannot automatically be adopted, though a find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al ground taken by the assessee for imposition of penalty in view of defect in notice issued by the A.O, in the context of factual matrix of the case. The legal ground so raised by the assessee goes to the root of issue and all the facts necessary for adjudication are already available on record, therefore, in terms of decision of the Hon ble Supreme Court in the case of National Thermal Power, we admit the legal issue for adjudication. It is clear from the notice issued U/s 274 of the Act with respect to each year, that the A.O. has not mentioned as to whether penalty was to be levied for concealment of income or for furnishing of inaccurate particulars of income. However, the notice so issued read as under: for concealing particulars of your income or furnishing inaccurate particulars of income . However, while levying the penalty, the A.O. has clearly held the penalty imposable for concealment of particulars of income. Thus, there is a variation in the charge levied for initiation of penalty vis a vis charge finally levied for imposition of penalty. It is clear from the notice so issued that the Assessing Officer had levied charge of concealed the particulars of income or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In so far as I.T.A. No. 5020 of 2009 was concerned, one of the substantial questions on which the appeal was filed by the revenue was: Whether the notice issued under section 271(1)(c) in the printed form without specifically mentioning whether the proceedings are initiated on the ground of concealment of income or on account of furnishing of inaccurate particulars is valid and legal? 14. While answering the above in favour of the assessee, the following findings were recorded by the Hon'ble Court: 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 [2007] 292 ITR 11 (SC) at page 19 has held that concealment of income and furnishing inaccurate particulars of income car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case? 18. The aforesaid question was dealt with by the Hon ble Court in favour of the assessee in the following words: 3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with section 271(1)(c) of the Income-tax Act 1961 (for short 'the Act; to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act the penalty proceedings had been initiated le. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunel while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of Commissioner of Income-tax vs. Manjunatha Cotton And Ginning Factory (2013) 359 ITR 565. 4. In our view since the matter is covered by judgment of the Division Bench o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court in UOI v/s Dharmendra Textile Processors (2008) 306 ITR 277 (SC). The Hon'ble Jurisdictional High Court in CIT v/s Smt. Kaushalya Ors., [1995] 216 ITR 660 (Bom), observed that notice issued under section 274 must reveal application of mind by the Assessing Officer and the assessee must be made aware of the exact charge on which he had to file his explanation. The Court observed, vagueness and ambiguity in the notice deprives the assessee of reasonable opportunity as he is unaware of the exact charge he has to face. The Hon'ble Jurisdictional High Court in Samson Perinchery (supra), following the decision of Hon'ble Karnataka High Court in CIT v/s Manjunatha Cotton Ginning Factory, [2013] 359 ITR 565 (Kar.), held, order imposing penalty has to be made only on the ground on which the penalty proceedings has been initiated. 22. The Hon ble Jurisdictional High Court in the case of Shevata Construction Co. Pvt. Ltd. (supra) has in para 9 as under: Taking into consideration the decision of the Andhra Pradesh High Court which virtually considered the subsequent law and the law which was prevailing on the date the decision was rendered on 27.08.2012. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 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 imposition of penalty u/s 271(1)(c) of the Act on two or more additions/disallowances, one or more falling under the expression 'concealment of particulars of income' and the other under the 'furnishing of inaccurate particulars of income', he must specify it so by using the word 'and' between the two expressions in the notice at the time of initiation of penalty proceedings. If he remains convinced in the penalty proceedings that the penalty was rightly initiated on such counts and imposes penalty accordingly, he must specifically find the assessee guilty of 'concealment of particulars of income' and also 'furnishing of inaccurate particulars of income' in the penalty order. If the charge is not levied in the above manner in all the three clear-cut situations discussed above in the penalty notice and also in the penalty order, the penalty order becomes unsustainable in law. 24. Applying the proposition of law laid down by the various Hon'ble Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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