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TMI Blog2021 (5) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Suchek Anchaliya For the Revenue : Shri T. S. Khalsa (Sr. AR) ORDER PER AMARJIT SINGH, (JM): The assessee has filed the above mentioned appeals against the order dated 29.03.2018 passed by the Commissioner of Income Tax (Appeals)-11, Pune [hereinafter referred to as the CIT(A) ] relevant to the A.Ys. 2010-11, 2011-12, 2012-13 in which the penalty levied by the AO has been ordered to be confirmed. ITA. NO.3718/Mum/2018 2. The assessee has filed the present appeal against the order dated 29.03.2018 passed by the Commissioner of Income Tax (Appeals)-11, Pune [hereinafter referred to as the CIT(A) ] relevant to the A.Y. 2012-13 in which the penalty levied by the AO has been ordered to be confirmed. 3. The assessee has raised the following grounds: - 1) On the facts and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in levying a penalty of ₹ 3,51,546/- u/s.271(1)(c) of the Income Tax Act 1961, 100% of the tax sought to be evaded, without considering the facts and circumstances of the case. 2) On the facts and circumstances of the case as well as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular charge was not tick off in the notice, therefore, in the said circumstances, the penalty is not liable to be sustainable in the eyes of law, hence the order of the CIT(A) confirming the penalty order of the AO is wrong against law and facts and is liable to be set aside. In support of these contentions the Ld. Representative of the assessee has placed reliance upon the law settled in ITA. No.1154/M/2014 in the case of CIT-11 Vs. Samson Perinchery and the order of the ITAT, Mumbai Bench in ITA. No.2555/M/2012 vide order dated 28.04.2017 titled as Meherjee Cassinath Holdings P. Ltd. Vs. ACIT, Circle-4(2). However, on the other hand, the Ld. Representative of the Department has refuted the said contentions. The copy of notice dated 28.03.2016 is on the file in which the Assessing Officer nowhere specify any limb to levy the penalty because none of the charge was tick off in the notice. It is not in dispute that the penalty u/s 271(c) of the Act is leviable on account of the concealment of particular of income and on account of furnishing the inaccurate particulars of income. Both have different connotations. In this regard, the Hon ble Supreme Court has appreciated the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(1)(c) of the Act dated 10.12.2010 has been issued to the assessee-company. A copy of the said notice has been placed on record and the learned representative canvassed that the same has been issued by the Assessing Officer in a standard proforma, without striking out the irrelevant clause. In other words, the notice refers to both the limbs of Sec. 271(1)(c) of the Act, namely concealment of the particulars of income as well as furnishing of inaccurate particulars of income. Quite clearly, non-striking-off of the irrelevant limb in the said notice does not convey to the assessee as to which of the two charges it has to respond. The aforesaid infirmity in the notice has been sought to be demonstrated as a reflection of non-application of mind by the Assessing Officer, and in support, reference has been made to the following specific discussion in the order of Hon'ble Supreme Court in the case of Dilip N. Shroff (supra):- 83. It is of some significance that in the standard proforma used by the Assessing Officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done. Thus, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 1154, 953, 1097 1126 of 2014 dated 5.1.2017 (supra) and the decision of the Tribunal holding levy of penalty in such circumstances being bad, has been approved. 11. Apart from the aforesaid, the ld. CIT-DR made an argument based on the decision of the Hon'ble Bombay High Court in the case of Smt. Kaushalya Others, 216 ITR 660 (Bom.) to canvass support for his plea that non-striking off of the irrelevant portion of notice would not invalidate the imposition of penalty u/s 271(1)(c) of the Act. We have carefully considered the said argument set-up by the ld. CIT-DR and find that a similar issue had come up before our coordinate Bench in the case of Dr. Sarita Milind Davare (supra). Our coordinate Bench, after considering the judgment of the Hon'ble Bombay High Court in the case of Smt. Kaushalya Ors., (supra) as also the judgments of the Hon'ble Supreme Court in the case of Dilip N. Shroff (supra) and Dharmendra Textile Processors, 306 ITR 277 (SC) deduced as under :- 12. A combined reading of the decision rendered by Hon ble Bombay High Court in the case of Smt. B Kaushalya and Others (supra) and the decision rendered by Hon ble Supreme Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of our coordinate Bench in the case of Dr. Sarita Milind Davare (supra), we hereby reject the aforesaid argument of the ld. CIT-DR. 13. Apart from the aforesaid discussion, we may also refer to the one more seminal feature of this case which would demonstrate the importance of non-striking off of irrelevant clause in the notice by the Assessing Officer. As noted earlier, in the assessment order dated 10.12.2010 the Assessing Officer records that the penalty proceedings u/s 271(1)(c) of the Act are to be initiated for furnishing of inaccurate particulars of income. However, in the notice issued u/s 274 r.w.s. 271(1)(c) of the Act of even date, both the limbs of Sec. 271(1)(c) of the Act are reproduced in the proforma notice and the irrelevant clause has not been struck-off. Quite clearly, the observation of the Assessing Officer in the assessment order and non-striking off of the irrelevant clause in the notice clearly brings out the diffidence on the part of Assessing Officer and there is no clear and crystallised charge being conveyed to the assessee u/s 271(1)(c), which has to be met by him. As noted by the Hon'ble Supreme Court in the case of Dilip N. Shroff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous year which has ended before the date of the search, but the return of income for such year has not been furnished before the said date or, wherein such return has been furnished before the said date, such income has not been declared therein; or (b) for any previous year which is to end on or after the date of the search, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause(c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income, unless, - (1) Such income is, or the transactions resulting in such income are recorded,- (i) in a case falling under clause (a), before date of the search; and (ii) in a case falling under clause (b), on or before such date; in the books of account, if any, maintained by him for any source of income of such income is otherwise disclosed to the [principal Chief Commissioner or Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner] before the said date; or (2) he in the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er clause (2) of Explanation 5 to Section 271(1(C). The first condition was that the assessee must make a statement under Section 132(4) in the course of search stating that the unaccounted assets and incriminating documents found from his possession during the search have been acquired out of his income, which has not been disclosed in the return of income to be furnished before expiry of time specified in Section 139(1). Such statement was made by the Karta during the search which concluded on August 1, 1987. It is not in dispute that condition No.1 was fulfilled. The second condition for availing of the immunity from penalty under Section 271(1)(C) was that the assessee should specify, in his statement under Section 132(4), the manner in which income stood derived. Admittedly, the second condition, in the present case also stood satisfied. According to the department, the assessee was not entitled to immunity under Clause (2) as he did not satisfy the condition for availing the benefit of waiver of penalty under Section 271(1)(c) as the assessee failed to file his return of income on 31st July, 1987 and pay tax thereon particularly when the assessee concealed on August 1, 1987 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 139 of the Act, as the Assessing Officer has made assessment on the said return and therefore, the return is to be considered for the purpose of penalty under Section 271(1)(c ) of the I.T. Act and the penalty is to be levied on the income assessed over and above the income returned under Section 153A, if any. 14. Further, in the present case, it appears from the record that the assessees had satisfied all the conditions which are required for claiming immunity from payment of penalty under Section 271(1) of the Act. The provision does not specify any time limit during which the aforesaid amount i.e. the amount of penalty with interest has to be paid. Admittedly when the assessees herein have paid the entire amount with interest, the Assessing Officer ought to have granted them immunity available under Section 271(1)(C ) of the Income Tax Act. 15. The decision relied upon by learned advocate for the respondent will not apply to the facts of the present case. 16. In view of the aforesaid facts of the case and also the principle laid down in the decisions relied upon by the learned senior counsel for the appellant more particularly the principle laid down in the case of Geb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because the assessee had not indicated in the return the income which was sought to be brought to taxation as a result of the search. The disclosure in the return after the search did not in any way, diminish its responsibility to do so. 11. Counsel for the assessee argues that the findings of the ITAT are sound and do not call for interference. It is urged that the appellant disclosed the amounts seized in respect of which specifics as to the years they were attributable to, were furnished. Since there was no variation between the statement made during the search proceeding and the sums disclosed during the returns (as all the amounts shown in the return under Section 153A coincided or tallied with the amount found) the revenue's invocation of Section 271(1)(c) of the Act by relying on Explanation 5, was unfounded. 12. The first question involves interpretation of Section 271(1)(c) of the Act. For convenience, the relevant provision of the Act is reproduced below: Section 271 (1) If the Assessing Officer or the Principal Commissioner or Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be strictly construed. Unless the case falls within the four-corners of the said provision, penalty cannot be imposed. Subsection (1) of Section 271 stipulates certain contingencies on the happening whereof the AO or the Commissioner (Appeals) may direct payment of penalty by the Assessee. Thus, what is required to be judged is whether there has been a concealment of income in the return filed by the assessee. 15. Earlier decisions indicated a conflict of opinion as to whether Section 271(1)(c) required the revenue to specifically prove mens rea on the part of the assessee to conceal his income. In order to remove the element of mensrea, the Finance Act, 1964 deleted the word deliberately that preceded the words concealed the particulars of his income in Section 271(1)(c). Nonetheless, even post the amendment, the Apex Court in KC. Builders v. Asstt. CIT [2004] 265 ITR 562/135 Taxman 461 held that: The word 'concealment' inherently carried with it the element of mens rea. Therefore, the mere fact that some figure or some particulars have been disclosed by itself, even if takes out the case from the purview of non-disclosure, cannot by itself take ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt years. On this point, several High Courts have also opined that the mere increase in the amount of income shown in the revised return is not sufficient to justify a levy of penalty. 18. The Punjab Haryana High Court in CIT v. Suraj Bhan [2007] 294 ITR 481/159 Taxman 26, held that when an assessee files a revised return showing higher income, penalty cannot be imposed merely on account of such higher income filed in the revised return. Similarly, the Karnataka High Court in the case of Bhadra Advancing (P.) Ltd v. Asstt. CIT [2008] 175 Taxman 551, held that merely because the assessee has filed a revised return and withdrawn some claim of depreciation penalty is not leviable. The additions in assessment proceedings will not automatically lead to inference of levying penalty. The Calcutta High Court in the case of CIT v. Suresh Chand Bansal [2010] 329 ITR 330 held that where there was an offer of additional income in the revised return filed by the assessee and such offer is in consequence of a search action, then if the assessment order accepts the offer of the assessee, levy of penalty on such offer is not justified without detailed discussion of the documents and their exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the original return under Section 139, for the purposes of all other provisions of the Act. This is further buttressed by Section 153A (1)(a) which reads: Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. 7. Taking into account all the facts and circumstances, it is quite clear that the no penalty is leviable in the said circumstances, therefore, we delete the penalty. ITA. Nos. 372 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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