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TMI Blog2021 (3) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... the search and, therefore, expenditures are part of concealed income of the assessee. In-fact, the assessee filed his return u/s 153(A) after enhancing the income on account of house renovation/repair expenses and the expenditure, therefore, in our opinion, cannot be stated as concealment of income. Therefore, the satisfaction in the instant case in our opinion is inadequate. For invoking Clause (c) of Section 271(1)(c) of the Act, while issuing the notice, the Assessing Officer has to categorically state upon under which limb the penalty is initiated, since the assessee has to give reply to the notice issued u/s 271(1)(c) read with Section 274 in respect of concealment of particulars of income separately and that of furnishing of inaccurate particulars of income separately. In the present case, though the initiation in the assessment order was on concealment of particulars of income, the first primary stage of satisfaction was not given by the Assessing Officer. The initiation of penalty has been simply stated on concealment of income but which was not properly revealed in notice issued to the assessee. The Department cannot over look the technicalities and the procedure given un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019 I.T.A. No. 8172/DEL/2019 I.T.A. No. 8100/DEL/2019 I.T.A. No. 8101/DEL/2019 I.T.A. No. 8102/DEL/2019 I.T.A. No. 8161/DEL/2019 I.T.A. No. 8162/DEL/2019 I.T.A. No. 8163/DEL/2019 I.T.A. No. 8164/DEL/2019 I.T.A. No. 8165/DEL/2019 SHRI R. K. PANDA ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER Appellant by : Sh. Mayank Patwari, Adv Respondent by : Sh. Satpal Gulati, CIT(DR) ORDER PER BENCH These 15 appeals are filed by the assessee against the order dated 13/08/2019 & ITA No. 8172/Del/2019, 8102/Del/2019 & ITA No. 8165/Del/2019 dated 16/08/2019 passed by CIT(A)'s-24, New Delhi for assessment years 2010-11, 2011-12, 2012-13 2013-14, 2014-15, 2015-16 & 2016-17 respectively. 2. The grounds of appeal are as under:- I.T.A. No. 8166/DEL/2019 (A.Y 2010-11) 1. The CIT(A) erred in law and on facts in confirming the levy of penalty of ₹ 48,364/- u/s 271 (l)(c) of the Act on account of additional income of ₹ 1,56.520/- offered by the assessee in his return of income filed u/s 153A while ignoring the facts, written submissions and evidences placed on record and rejecting the bonafide explanation of the assessee for non- imposition of the penalty. Thus, the penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and rejecting the bonafide explanation of the assessee for non- imposition of the penalty. Thus, the penalty so levied should be cancelled." I.T.A. No. 8172/DEL/2019 (A.Y 2016-17) 1. The CIT(A) erred in law and on facts in confirming the levy of penalty of ₹ 12,851/- u/s 271AAB of the Act on account of additional income of ₹ 64255/- offered by the assessee in his return of income filed u/s 153A while ignoring the facts, written submissions and evidences placed on record and rejecting the bonafide explanation of the assessee for non- imposition of the penalty. Thus, the penalty so levied should be cancelled." I.T.A. No. 8100/DEL/2019 (A.Y 2013-14) The CIT(A) erred in law and on facts in confirming the levy of penalty of ₹ 1,18,737/- u/s 271 (l)(c) of the Act on account of additional income of ₹ 3,84,261/- offered by the assessee in his return of income filed u/s 153A while ignoring the facts, written submissions and evidences placed on record and rejecting the bonafide explanation of the assessee for non- imposition of the penalty. Thus, the penalty so levied should be cancelled. I.T.A. No. 8101/DEL/2019 (A.Y 2014-15) The CIT(A) erred in law and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. I.T.A. No. 8164/DEL/2019 (A.Y 2014-15) The CIT(A) erred in law and on facts in confirming the levy of penalty of ₹ 9,69,546/- u/s 271 (1)(c) of the Act on account of additional income of ₹ 31,73,165/- offered by the assessee in his return of income filed u/s 153A while ignoring the facts, written submissions and evidences placed on record and rejecting the bonafide explanation of the assessee for non- imposition of the penalty. Thus, the penalty so levied should be cancelled. I.T.A. No. 8165/DEL/2019 (A.Y 2016-17) The CIT(A) erred in law and on facts in confirming the levy of penalty of ₹ 42,145/- u/s 271 AAB of the Act on account of additional income of ₹ 2,10,723/- offered by the assessee in his return of income filed u/s 153A while ignoring the facts, written submissions and evidences placed on record and rejecting the bonafide explanation of the assessee for non- imposition of the penalty. Thus, the penalty so levied should be cancelled. 3. Firstly, we are taking up facts of ITA No. 8166/Del/2019 for Assessment Year 2010-11 as the lead case. Search and seizure operation u/s 132 of the Act was carried out at the premises of Shri Ashish Mittal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of unaccounted income of ₹ 1,56,520/- which was surrendered by the assessee. 4. Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A). The appeal of the assessee was dismissed by the CIT(A). 5. The Ld. AR submitted that the penalty order has not given any specific provision as to upon which the penalty is imposed. The Ld. AR submitted that the Assessing Officer was not sure about whether it is a concealed income or furnishing of inaccurate particulars. The Ld. AR relied upon the decision of the Hon'ble Supreme Court in case of CIT vs. SSA's Emerald Meadows (2016) 73 Taxman.com 248 (SC) and CIT v. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Kar). The Ld AR further submitted that the Hon'ble Delhi High Court in case of Pr. CIT Vs. M/s. Sahara India Life Insurance Company Ltd. (ITA No.475/2019 vide order dated 02.08.2019) held that notice issued by the Assessing Officer would be bad in law if it did not specify under which limb of Section 271(1)(c) of the Act penalty proceedings had been initiated. Therefore, the Ld. AR submitted that the penalty order itself becomes bad in law. The Ld. AR further submitted that surrendering u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty proceedings considering the surrendered income as reported in return under section 153A of the act as concealment of income under section 271(1)(c). So, the limb to initiate the penalty proceedings is evident from perusal of the assessment order. Moreover, it is a case where the assessee truly knows the change of concealment of income as the income has been surrendered on his own as against any addition made by the AO. 5. The assessee has relied on the decision of Hon'ble High Court of Karnataka in the case of Manjunatha Cotton and Ginning Factory which is the basis for decision in the case of SSA Emerald decided by Hon'ble Supreme Court. It may be relevant to take note of the fact that the decision of Manjunatha Cotton is in respect of four different assessee out of which the following ground of appeal are in the respect of M/s. Veerabhadrappa Sangappa & Co. a partnership firm carrying on the business of Mining & Processing of iron ore and sale and export (ITA No.5020 of 2009). 1. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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(l)(c) do not exist as such he is not liable to pay penalty. The practice of the Department sending a printed form 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 spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... weather 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 Gujrat 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 Taxmn 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..." 9. As highlighted above in the aforesaid cited decision at para 59 of the judgment of Hon'ble Karnataka High Court that if the order passed by the Authority categorically records a finding regarding the existence of any said grounds mentioned therein and then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. Concise Oxford English Dictionary, Indian Edition, explains notice to mean the fact of observing or paying attention to something; advanced notification or warning; a displayed sheet or placard giving news or information. It means to become aware of. In other words, to put someone on notice would mean warn someone of something about/or likely to occur. Black's Law Dictionary, Eighth Edition, defines the expression 'notice' to mean having actual knowledge of a fact; has received information about it; has reason to know it; knows about the related fact. In CST Vs. Subhash & Company, (2003) 3 SCC 454, Supreme Court deliberated upon the concept of notice and observed that the term 'notice' has originated from the Latin word "notifia" which means "being known" or "a knowing". Thereafter, Supreme Court referred to the definition of the word 'notice' 14/19 assessee had furnished inaccurate particulars of income, penalty proceedings under Section 271(l.)(c) were also initiated separately. Therefore, it was apparent that penalty proceedings were initiated for furnishing inaccurate particulars of word notice in various general and jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence is noticed by the AO, between the reported and the assessed income. The burden is then on the assessee to explain, by cogent and reliable evidence as to how the addition does not amount to concealment of income. When the initial onus placed by the explanation, has been discharged by the assessee, the onus shifts to the Revenue to show that the amount in question constituted the concealed income of the assessee. 3. It is trite law that the voluntary disclosure does not release the assessee from the mischief of penal proceedings. 4. The surrender of income in this case was not voluntary because the offer of surrender was made after the detection made by the Assessing Officer, it cannot therefore be said that the surrender of income was voluntary. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during course of the assessment proceedings." 14. In view of the above principles, it is very much evident that the voluntary disclosure of income does not release the assessee from the mischief of penal proceedings. 15. It has been held i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the search action took place on 30.03.2016. So, explanation 5A to section 271(1)© of the act was operative which specifically provides for penalty for the income declared in the return of income filed in response to notice under section 153A of the act. Explanation 5A categorically mentions that if the assessee claims any income based on any entry in any Document, then, not withstanding that such income is declared by him in any return of income furnished on or after the date of search is deemed to be a case of concealment of income. The assessee argued that explanation 5A is not applicable in his case because the notings in the seized document are in respect of expenditure and not in the nature of income. It is prayed that this argument is without merit because unexplained expenditure would be assesses as income in the hands of the assessee which basically means that the assessee invested his unaccounted income to meet such unexplained expenses. It is the case of two sides of same coin. Moreover, the assessee on his own surrendered the income on account of entries of house renovation expenses as recorded in seized record Thus, the explanation 5A is squarely applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate the penalty order. 22. It may be reiterated that the case in hand is of the income surrendered by the assessee and therefore, he knows the best about the nature of such income and therefore, the relevance of notice gets further diluted in such case where the concealed income is the income surrendered by the assessee." 7. We have heard the rival arguments made by both the parties and perused the material available on record. It is pertinent to note that Section 271 has specifically given the procedure upon which rather to say provisions upon which the penalty is attracted in a particular case. Firstly, the Assessing Officer has to give the satisfaction that the person has failed to comply with the notice under Sub Section 2 of Section 115WD or under Sub Section 2 of Section 115WE or under Sub Section 1 of Section 142 or Sub Section 2 of Section 143 or fails to comply with a direction issued under Sub Section 2 A of Section 142 or has concealed the particulars of his income or furnished inaccurate particulars of such income. Thus, the Assessing Officer has to first give his satisfaction in the assessment order itself about the concealment of particulars of income or furnishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer though finally imposed the penalty on concealment of particulars of income was not sure whether it is for furnishing of inaccurate particulars or concealment of income. The assessee has suo moto /voluntarily surrendered the amount before the Assessing Officer and paid the taxes thereupon. Thus, on the merit also the assessee has proved that the penalty does not survive. 8. The Ld. DR has relied upon the decision of SSA's Emerald thereby making the difference of opinion that there are four different assessee's and in case of M/s Veerabhadrappa Sangappa & Company the facts are distinguishable. But the overall principle given by the Hon'ble Apex Court remains in legal parlance that the penalty has to be imposed on a clear specific manner which is given under the Income Tax Statute while invoking Section 271(1)(c) & that cannot be over looked. The Ld. DR relied upon the decision of Hon'ble Bombay High Court in case of Ventura Textile Ltd. which states that the assessee once received notice, the striking of specific limb does not vitiate the penalty order. But after going through the said decision of the Hon'ble Bombay High Court the Hon'ble High Court also reiterated that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, ITA No. 8100/Del/2019 for Assessment Year 2013-14 is allowed. 15. Facts of ITA No. 8101/Del/2019 for Assessment Year 2014-15 in case of Akshay Gupta are identical and hence we are following the earlier order for Assessment Year 2010-11, Thus, ITA No. 8101/Del/2019 for Assessment Year 2014-15 is allowed. 16. Facts of 8161/Del/2019 For Assessment Year 2013-14 in case of Kunal Gupta are identical and hence we are following the earlier order for Assessment Year 2010-11. Thus, ITA No. 8161/Del/2019 for Assessment Year 2013-14 is allowed. 17. Facts of 8162/Del/2019 for Assessment Year 2014-15 in case of Kunal Gupta) are identical and hence we are following the earlier order for Assessment Year 2010-11. Thus, ITA No. 8162/Del/2019 for Assessment Year 2014-15 is allowed. 18. Facts of ITA No. 8163/Del/2019 Assessment Year 2013-14 in case of Ayush Gupta are identical and hence we are following the earlier order for Assessment Year 2010-11. Thus, ITA No. 8163/Del/2019 for Assessment Year 2013-14 is allowed. 19. ITA No. 8164/Del/2019 for Assessment Year 2014-15 in case of Ayush Gupta are identical and hence we are following the earlier order for Assessment Year 2010-11. Thus, ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es accordingly. Thus, the Ld. AR submitted that the penalty may be deleted. The Ld. AR further reiterated the arguments made in ITA No. 8166/Del/2019 for Assessment Year 2010-11. 23. The Ld. DR relied upon the assessment order, penalty order and the order of the CIT(A) as well as the submissions reproduced hereinabove. 24. We have heard both the parties and perused the material available on record. The insertion of this Section is from Finance Act, 2012 w.e.f 1/7/2012. The Section 271AAB shall be invoked in case where search has been initiated u/s 132 on or after 1st Day of July, 2012. In the present case, the search took place on 30/03/2016. This penalty can be imposed in addition to tax if any payable by him. The Assessing Officer specifically at the time of penalty proceedings contemplated Clause B of Section 271AAB of the Act. But the limb of Clause B specifically mentions that if such assessee in the course of search in a statement under Sub Clause 4 of Section 132 does not admit the undisclosed income. However, in the present case, the assessee has very much admitted the undisclosed income and surrendered the undisclosed income. The assessee also paid the tax thereon. Besid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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