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TMI Blog2019 (2) TMI 2076X X X X Extracts X X X X X X X X Extracts X X X X ..... 1344 & 1345/KOL/2018 & C.O. Nos. 82 & 83/KOL/2018 (in I.T.A. Nos. 1344 & 1345/KOL/2018) - - - Dated:- 11-2-2019 - Shri P.M. Jagtap, Vice-President (KZ) and Shri Satbeer Singh Godara, Judicial Member For the Department : Shri Radheshyam, CIT, D.R Shri M.K. Biswas, JCIT, For the Assessee : Shri D.S. Damle, F.C.A, ORDER Per Shri P.M. Jagtap, Vice-President (KZ):- These two appeals are preferred by the Revenue against two separate orders passed by the ld. Commissioner of Income Tax (Appeals)- 21, Kolkata both dated 20.04.2018, whereby he cancelled the penalties of Rs.28,52,238/- and Rs.23,55,910/- imposed by the Assessing Officer for assessment years 2005-06 and 2006-07 respectively and the same are being disposed of along with the corresponding Cross Objections filed by the assessee being C.O. Nos. 82 83/KOL/2018. 2. The assessee in the present case is an individual, who passed away on 17.02.2009. Thereafter a search and seizure action was conducted in the cases belonging to Mohanka Group on 22.09.2011. On the basis of material found during the course of the search, the undisclosed income of the assessee was determined by the Assessing Officer fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration under section 274 to point out that the irrelevant portion, viz. furnished inaccurate particulars of income or concealed particulars of such income was not struck off by the Assessing Officer. It is observed that the Coordinate 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 similar issue in the identical fact situation and the order passed by the Assessing Officer imposing penalty under section 271(1)(c) was held to be invalid by the Tribunal relying on the decision of the Hon ble Karnataka High Court in the case of CIT Another vs.- Manjunatha Cotton Ginning Factory reported in 359 ITR 565 after discussing the proposition laid down therein in great detail in paragraph no. 8 to 8.2 of its order dated 06.11.2015, which read as under:- 8. The next argument that the show cause notice u/s.274 of the Act which is in a printed form does not strike out as to whether the penalty is sought to be levied on the for furnishing inaccurate particulars of income or concealing particulars of such income . On this aspect we find that in the show caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase 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 initiation of the penalty proceedings also must be for both the offences. But drawing up penalty proceedings for one offen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 pro forma without striking of the relevant clauses will lead to an inference as to non-application of mind. 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 271. e) The existence of such conditions should be discernible from the Assessment Order or order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. However, the validity of the assessment or reassessment in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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