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TMI Blog2021 (1) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... n ITA Nos.1700 to 1702/Bang/2018 - - - Dated:- 20-1-2021 - Shri N. V. Vasudevan, Vice President And Shri B. R. Baskaran, Accountant Member For the Assessee : Shri. Ravishankar, Advocate For the Revenue : Shri. Tshering Ongda, JCIT(DR)(ITAT), Bangalore ORDER PER BENCH ITA Nos.1700 to 1702/Bang/2018 are appeals by the Revenue against the order dated 4.12.2017 of CIT(A)-6, Bengaluru, relating to Assessment Years 2005-06 to 2007-08. The assessee has filed C.O. against the very same order of CIT(A). 3. In the appeals filed by the Revenue, there is a delay of one day in the filing of appeal which has been explained as due to administrative reasons. The delay being not inordinate is condoned accepting the reasons given in the Affidavit filed in support of the application for condonation of delay. 4. As far as the C.O. filed by the assessee is concerned, there is a delay of 327 days in filing the C.O. It has been explained by the assessee in the application for condonation of delay supported by Affidavit that the earlier Chartered Accountant did not advise the assessee to file a C.O. and that the Counsel to whom the case was entrusted later advised the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the residential premises and the office located at first floor of his residence at no. 639, Sulibele Main Road, Devanahalli on 26.08.2008. During the search proceedings, incriminating documents evidencing phenomenal land transactions and concealment of income were found, seized and impounded. While analyzing the materials seized/impounded at his residence and office premises it was seen that the Assesseee has about 1200 acres of land in his possession. The Assessee was confronted with the seized materials and his books and statement of affairs was constructed on the basis of the bank accounts and seized materials. The Assessee failed to substantiate the details of all the assets held by him with the explainable sources. Further he adopted Net Wealth Accretion Method to arrive at his undisclosed income. Notice under section 153A dated 24.7.2009 was issued to the assessee, requiring the assessee to file the return of income within 30 days from the date of service of notice, by the ACIT, Central Circle-2(1), Bangalore. 7. In response to the notice u/s.153A of the Act, the assessee filed a letter dated 18.4.2010 stating that the return of income already filed by him on 2.4.2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t discernable from the notice issued under section 274 r.w.s. 271 of the Act and consequently the order of penalty passed under section 271[1][c] of the Act on an invalid notice do not have any legs to stand and requires to be cancelled and the penalty imposed under section 271[1][c] of the Act deserves to be deleted, on the facts and circumstances of the case. 11. We have heard the submissions of the parties on the additional ground raised by the assessee in the C.O. We have perused the show cause notice issued under section 274 of the Act for Assessment Years 2005-06, 2006-07 and 2007-08. Copies of which are at pages 2, 14 and 26 of the Paper Book filed by the assessee. A perusal of the aforesaid show cause notice reveals that the AO has not struck off the irrelevant portion as to whether the charge against the assessee is concealing of particulars of income or furnishing of inaccurate particulars of income. The learned Counsel for the assessee drew our attention to the decision of Hon ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton and Ginning Factory (2013) 218 Taxmann 423 (Kar) wherein it was held that if the show cause notice under section 274 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. 13. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority 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 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. How ..... X X X X Extracts X X X X X X X X Extracts X X X X
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