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TMI Blog2023 (1) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... e challenging the separate orders of ld. CIT(A)-21, Kolkata by which the ld. CIT(A) deleting the penalty imposed u/s 271(1)(c) of the I.T. Act, 1961. Appeal being 587 to 589/Kol/2022 relating to assessment year 2008-09, 2009-10 and 2014-15 against the same assessee. Since the facts and issues involved in these appeals are common except for date, figures and assessment year. They have been clubbed together and taken up for disposal in consolidated order for the sake of convenience. The decision in 587/Kol/2022 shall apply mutantis mutandis in other appeals also, hence the grounds raised in ITA No. 587/Kol/2022 is reproduced as under: 1. That on the facts and in the circumstances of the case, the ld. CIT(A) has erred in law and facts of the case in cancelling the penalty of Rs. 2,33,74,126/- levied u/s 271(1)(c) of the Act without appreciating that the AO did not mention the specific charge, viz. concealment of the particulars of income or furnishing of inaccurate particulars of such income and did not strike out the inappropriate words though in assessment order dated 31.03.2016 the assessing officer had specified in very clear terms that the penalty proceedings u/s 271(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable cause failed to furnish it within the time allowed and the manner required by the said Section 139(1) or by such notice. * have without reasonable cause failed to comply wth/a notice u/s.22(4)/23(2) of the Indian Income Tax Act, 1922 or u/s. 142(1)/143(2) of the Income Tax 1961. * have concealed the p rticulars of your income or furnished inaccurate particulars of such income.. The appellant has submitted that the AO had, in the notice u/s 274 r/w section 271(1)(c), failed to specify the particular condition or limb for which penalty proceedings are initiated. He has stated that it was the duty of Ld. Assessing Officer to mention as to the violation of which limb and condition, that is, whether it was for the concealment of particulars of income or for the furnishing of inaccurate particulars of income that the penalty proceedings were being conducted and the appellant was being put to notice. The AO has not done this in the present case and for such failure, the entire penalty proceedings become void and penalty levied in this case, deserves to be deleted. During appeal the appellant has also produced a copy of the notice u/s 274 r/w section 271(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pulated 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 form where all the grounds mentioned in section 271 are mentioned would not satisfy the 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 per cent. to 300 per cent 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, the principles of natural justice is offended if the showcause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee. This decision has been relied upon by the Hon'ble Karnataka High Court in the case of SSA Emerald Meadows to take a similar view. The Hon'ble Supreme Court has dismissed the appeal of the department in the-case of Commissioner of Income Tax and others vs. SSA Emerald Meadows 2016,73 taxmann.com 248 SC by stating that no merits have being found in the Department's SLR against the order of the Hon'ble High Court of Karnataka. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y notice are listed below 1. Order of Bombay High Court in the case of CIT VS. Shi Samson Perinchery. 2. ITAT Order, Kolkata Bench in the case of Gautam Jhunjhunwala vs. ITO. 3. ITAT Order, Kolkata Bench in the case of Abu Mansur Ali vs. DCIT ITA No. 2104/Kol/2017 A.Y. 2012-13 ITO Wd-13(1), Kol. Vs. M/s Ambey Retailers Pvt. Ltd. Page3 4. ITAT Order, Kolkata Bench in the case of M/s Atmaram Co. v. DCIT. 5. ITAT Order, Kolkata Bench in the case of ITO vs. M/s Swastik Refinery Pvt. Ltd. 6. Order of Hon'ble Supreme Court in the case ofCIT vs. M/s V.S. Lad Sons. 7. Order of Hon'ble Supreme Court in the case of CIT vs. Veerabhadrappa Sangappa Co. 8. ITAT order, Kolkata Bench in the case of Suresh Karmakar vs. DCIT. In an elaborately discussed decision by the Hon'ble Kolkata Tribunal, in the case of lTO, Ward -13(1), Kolkata, vs M/S. Ambey Retailers Pvt. Ltd., delivered on 5 September, 2018, the Hon'ble D-Bench of the Tribunal, in ITA No.2104/Kol/2017 for AY 2012-13, the Hon'ble Bench has discussed the entire gamut of citations relevant to the present question of law. They have not only discussed the various c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the particular condition for which penalty proceedings were initiated. 6. Per contra, the ld. counsel submitted before us that the notice u/s 274 r.w.s. 271(1)(c) of the Act issued by the ld. AO has failed to specified the particular condition for which penalty proceedings are initiated and it is the duty of the ld. AO to specify under which limb and condition, the penalty proceeding are being initiated. As such the ld. CIT(A) rightly allowed the appeal of the assessee. Further in support of his contention, the ld. DR submitted a paper book containing almost 53 pages which contains copy of notice dated 31.03.2016 issued u/s 274 r.w.s 271(1)(c) of the Act by the ld. AO upon the assessee along with the list of case law in support of his argument. 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 strike out by the ld. AO. It is observed that the ld. co-ordinate 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is initiated, in the notice to be issued under Section 274, they could conveniently refer to the said order which contains the satisfaction of the authority 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 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered is not bona fide, an order imposing penalty could be passed. m) If the explanation offered, even though not substantiated by the assessee, 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 natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 271(1)(c) without specifying which of the two contraventions, the assessee is guilty of was defective and the penalty imposed in pursuance of such defective notice was not sustainable. To arrive at this conclusion, Hon ble Calcutta High Court relied on the decision of Amrit Foods vs.- Commissioner of Central Excise UP reported in (2005) 13 SCC 419 as well as their own decision in the case of Principal CIT vs. Dr. Murari Mohan Koley (ITAT No. 306 of 2017 dated 18.07.2018). The issue raised by the assessee in this appeal thus is squarely covered by the said judicial pronouncements including the decision of the Hon ble Jurisdictional High Court and respectfully following the same, we cancel the penalty imposed upon the assessee under section 271(1)(c) by the ld. AO and sustained the order passed by the ld. CIT(A). 8. Since, we dismiss the appeal filed by the revenue challenging the impugned order passed by the ld. CIT(A) in ITA No. 587/Kol/2022, the reasons stated above shall apply mutantis mutandis and all the appeals filed by the revenue are dismissed. 9. In the result, all the three appeals filed by the revenue are dismissed and copy of common order passed is to be pl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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