9911796707
TMI Blog2024 (11) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... rmations filed by the assessee not been verified. Levy of penalty is not a mechanical procedure and has to be issued with lot of checks and balances. Additions sustained by this Tribunal is not a fit case to levy penalty u/s. 271(1)(c) of the Act. Assessee appeal allowed. - Smt. Beena Pillai (Judicial Member) And Smt. Renu Jauhri (Accountant Member) For the Assessee : Shri N.R. Agrawal For the Department : Shri Paresh Deshpande, SR AR ORDER PER : BEENA PILLAI (JM) Present penalty appeal arises out of order dated 07/10/2019 passed by the Ld.CIT(A)-6, Mumbai for Assessment Year 2002-03 on following grounds of appeal:- 1. The Learned CIT (Appeals) erred in confirming the order by ITO passed u/s 271(1)(c) of the Act. 2. The Learned CIT (Appeals) erred in dismissing the ground that, there is a confusion in the mind of AO about which limb penalty is to be levied. Brief facts of the case are as under:- 2.1 The assessee filed its return of income for the year under consideration on 30/10/2002. The case was selected for scrutiny and statutory notice under section 142(1) along with 143(2) was issued to the assessee. During the course of assessment proceedings, the Ld.AO noticed that, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 68 of the Act, as the assessee could only furnish the confirmation letters which could not be verified. 2.2. In the mean while the Ld.AO initiated penalty proceedings u/s. 271(1)(c) of the Act for concealment of income. A show cause notice was issued to the assessee on 14/12/2009. The assessee requested to keep the penalty proceeding in abeyance till the disposal of the appeal by the Ld.CIT(A). Once the Ld.CIT(A) confirmed the addition in quantum proceeding, the Ld.AO issued another show cause notice dated 26/03/2012. 2.2.1 In penalty, proceedings, the Ld.AO after considering relevant provision of Explanation 1 to section 271(1)(c) and placing reliance on various decisions of Hon'ble High Courts, concluded that the assessee concealed particulars of income for the year under consideration, within the meaning of section 271(1)(c) read with Explanation 1 thereto. Accordingly, the Ld.AO worked out the minimum penalty @100% of tax sought to be evaded at Rs. 1,03,58,712/-. Aggrieved by the penalty levied by the Ld.AO, the assessee preferred appeal before the Ld.CIT(A)., who confirmed the levy of penalty by the Ld.AO. Aggrieved by the penalty order of the Ld.CIT(A), the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, it is noted that penalty is levied by the Ld.AO for concealment alone. The main contention of the Ld.AR was that the initiation of penalty has not been clearly mentioned in the notice issued u/s. 274 of the Act and therefore the penalty levied for concealment of income/furnishing of inaccurate particulars of income in respect of the addition made amounting to Rs. 1,39,14,000/- is bad in law. 4.2. We note that the disallowance of expenditure has been confirmed by this Tribunal under section 43B. The assessee had claimed certain expenditure on accrual basis, under a bonafide belief. In so far as the addition of increase in liabilities are concerned, the assessee had furnished confirmations which the Ld.CIT(A) did not verify. The Tribunal partly confirmed the addition under section 68 on this issue. 4.3. At this juncture, we refer to the decision of Hon'ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory reported in (2013) 359 ITR 565, upheld by Hon ble Supreme Court in case of Emerald reported in (2016) 73 taxmann.com 248. Hon ble Court deals with circumstances under which penalty should be imposed / cannot be imposed and also holds that pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough not substantiated by the assessee, but is found to be bonafide 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 natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. s) Taking up of penalty proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X
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