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TMI Blog2021 (6) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... Sahara s case [ 2019 (8) TMI 409 - DELHI HIGH COURT] - Accordingly, we set aside the order of the Ld.First Appellate Authority and direct the AO delete the penalty. Appeal filed by the assessee is allowed. - ITA No.3598/Del/2015 - - - Dated:- 31-5-2021 - Shri Sudhanshu Srivastava, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Appellant : Sh. K. K. Juneja, CA Dr. Rakesh Gupta, Adv. For the Respondent : Sh. N.C.Uppadhay, Sr. DR ORDER PER SUDHANSHU SRIVASTAVA, JM: This appeal is preferred by the assessee against order dated 23rd March, 2014 passed by the Ld. Commissioner of Income Tax (Appeals)- Dehradun {CIT (A)} for Assessment Year 2009-10 wherein the Ld. CIT(A) has partly upheld levy of penalty to the tune of ₹ 9,97,600/- imposed u/s 271(1) (c) of the Income Tax Act, 1961 (hereinafter called the Act ). 2.0 The brief facts of the case are that for the year under consideration, the assessee had shown net income from long term capital gain at ₹ 36,99,790/- on sale of property at NOIDA for ₹ 50 lacs. The Income from Long Term Capital Gain was claimed as exempt u/s 54 of the Act by stating that sum of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shing of inaccurate particulars of her income earned by her from Long Term Capital Gain on sale of land at Noida chargeable to tax and rendered herself liable to penalty. 2. That the Hon ble Commissioner of Income Tax (Appeals) has erred in law as much as on the facts of the case in upholding the impugned penalty u/s 271(1)(c) of the Act without appreciating that the learned Assessing Officer while initiating the penalty proceeding has not recorded his satisfaction in writing in the assessment order itself which is mandatory in law as to whether on facts of the case the appellant s falls either for Concealment of Income or furnishing inaccurate particulars of income . In the absence of a clear finding in this regard, the initiation of penalty u/sec. 271(1)(c) of the Act is unsustainable in law and is in violation to the specific provision of section 271(1)(c) of the Act. 3. That the Hon ble Commissioner of Income Tax (Appeals) while sustaining the impugned penalty of ₹ 9,97,600/- further added to appreciate that the appellant had already disclosed the accurate particulars of Long Term Capital Gain accrued to her during the year under appeal on sale of her land at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted penalty of ₹ 9,97,600/- be deleted/quashed after providing a fair opportunity of being heard to the appellant. 3.0 The Ld. Authorized Representative (Ld. AR) drew our attention to notice issued u/s 274 of the Act vide dated 26.12.2011 and submitted that in this notice, penalty has been proposed to be imposed for having concealed the particulars of income or for furnishing inaccurate particulars of income. It was submitted that, thus, the assessee was not made aware of the charge for which the penalty was being proposed to be imposed. It was further submitted that it was settled law that the assessee should be made aware of the charge for which the penalty is being proposed to be imposed and a defect in the notice in the nature of the specific limb not being clearly stated would vitiate the entire penalty proceedings. It was submitted that such a view has also now been upheld by the Hon ble High Court of Delhi in the case of Sahara India Insurance Company Ltd vide order dated 02.08.2019 in ITA 475/2019. The Ld. AR also drew our attention to page 6 of the penalty order wherein the AO has held that the assessee had furnished inaccurate particulars. It was submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been called upon to explain if she has concealed the particulars of income or furnished inaccurate particulars of such income. The Hon ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory Ors 359 ITR 565(Kar) has dealt with the identical issue threadbare and come to the following conclusion :- 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 271. e) The existence of such conditions should be discernible from the Assessment Order or order of the Appellate Authority or Revisional Authority. f) Ever if there is no specific finding regarding the existence of the conditions mentioned in Section 271(1)(c), at least the facts set out in Explanation 1(A) (B) it should be discernible from the said order which would by a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law. r) The assessee should know the grounds which he has to meet specifically. Otherwise, principle 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. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings. 5.3 Therefore, respectfully following the law laid down by the Hon ble High Court of Karnataka, as stated above, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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