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TMI Blog2020 (12) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... ] For the Assessee : Shri Anil Kochar, Advocate For the Revenue : Shri Jayanta Khanra, JCIT, DR ORDER PER P.M. JAGTAP, VICE-PRESIDENT (KZ) This appeal filed by the assessee is directed against the order of Ld. CIT(A) 2, Kolkata dated 06.09.2019 whereby he confirmed the penalty of ₹ 2,32,318/- imposed by the AO u/s 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 execution of work contracts for railway and others. The return of income for the year under consideration was filed by the assessee on 27.09.2012 declaring a total income of ₹ 10,99,43,540/-. In the assessment completed u/s 143(3) of the Act, the total income of the assessee was determined by the AO at ₹ 12,08,04,960/- after making inter alia an addition of ₹ 7,16,043/- on account of interest received on income tax refunds u/s 244A of the Act. On confirmatiom of the said addition by the Ld. CIT(A) in the quantum proceedings, notice u/s 271(1)(c) was issued by the AO required the assessee to show cause as to why penalty in respect of said addition should not be imposed by the assessee u/s 271(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue before us challenging the very initiation of the penalty proceedings by the authorities below under section 271(1)(c) on the ground that in the absence of any specific mention in the show-cause notice issued under section 274 of the Act for the year under consideration by the authorities below as to whether the asseessee is guilty of having furnished inaccurate particulars of income or of having concealed particulars of such income , the initiation of penalty proceedings itself was bad in law and the penalty order passed in pursuance thereof is liable to be quashed being invalid. He has invited our attention to the relevant penalty notice to point out that the irrelevant portion, viz. furnished inaccurate particulars of income or concealed particulars of such income was not struck off by the Assessing Officer. It is observed that the Coordinate Bench of this Tribunal in the case of Suvaprasanna Bhattacharya vs.- ACIT (in ITA No. 1303/KOL/2010) cited by the ld. Counsel for the assessee had an occasion to consider a similar issue in the identical fact situation and the order passed by the Assessing Officer imposing penalty under section 271(1)(c) was held to be invalid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty which has passed the order. However, if the existence of the conditions could not be discerned from the said order and if it is a case of relying on deeming provision contained in Explanation-1 or in Explanation-1(B), then though penalty proceedings are in the nature of civil liability, in fact, it is penal in nature. In either event, the person who is accused of the conditions mentioned in Section 271 should be made known about the grounds on which they intend imposing penalty on him as the Section 274 makes it clear that assessee has a right to contest such proceedings and should have full opportunity to meet the case of the Department and show that the conditions stipulated in Section 271(1)(c) do not exist as such he is not liable to pay penalty. The practice of the Department sending a printed farm where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law when the consequences of the assessee not rebutting the initial presumption is serious in nature and he had to pay penalty from 100% to 300% of the tax liability. As the said provisions have to be held to be strictly construed, notice issued under Section 274 should satisfy the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 292 ITR 11 at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 171 Taxman 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but is found to be bona fide and all facts relating to the same and material to the computation of his total income have been disclosed by him, no penalty could be imposed. n) The direction referred to in Explanation IB to Section 271 of the Act should be clear and without any ambiguity. o) If the Assessing Officer has not recorded any satisfaction or has not issued any direction to initiate penalty proceedings, in appeal, if the appellate authority records satisfaction, then the penalty proceedings have to be initiated by the appellate authority and not the Assessing Authority. p) Notice under Section 274 of the Act should specifically state the grounds mentioned in Section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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