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TMI Blog2025 (4) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... arises for consideration both the parties agreed that all these 13 appeals be heard together and be disposed off by a common order for sake of convenience and ease. We thus take up Appeal No.673/Ind/2024 for Assessment Year 2000 to 2001 as lead case as facts and circumstance in other appeals are pari mataria. 2.2 That the assessee is an individual deriving income from the business of manufacturing and sale of paints and varnishes. 2.3 That the assessee maintains regular books of accounts and Tax Audit Reports are regularly filed. 2.4 That a search was conducted at the premises of the assessee on 07.09.2006. 2.5 That vide "first assessment order" dated 17.12.2007 total income of the assessee was computed as Rs. 31,57,850/-. The additions made were broadly under following category:- 1. Disallowance out of purchases 2. Disallowance out of wages and salary, unexplained unsecured loan/security deposits and unexplained investment. That the "first assessment order" dated 17.12.2017 was u/s 153A r.w.s. 143(3) of the Act. 2.6 That the "first assessment order" dated 17.12.2007 (supra) was challenged by the assessee in the first appeal before CIT(A) who vide order No.CIT(A)-I/BPL/I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , names of the persons to whom amount paid, could not be verified and therefore addition of Rs. 9,04,325/- was made. A satisfaction that penalty proceedings u/s 271(1)(c) is separately being initiated was too recorded. The assessee was also asked why addition of Rs. 46,177/- made in the original assessment should not be made again to the total income. In response to this, the assessee submitted that " it is submitted that in the original assessment, addition of Rs. 46,117/- was made being 1/3rd disallowance out of the total wages and salary of Rs. 1,38,352/- as debited in the Profit & Loss Account. Sir, it is submitted that the assessee maintains regular and proper books of accounts and all the expenses debited in this account are genuine and proper and are supported by the vouchers incurred for these expenses. This is evident from the copy of ledger account of wages and salary. Further, the expenses claimed is reasonable and proportionate as compared to the turnover of the business. Hence, it is requested that no disallowance should be made in this account". The Ld. A.O in his assessment order did not accept the contention of the assessee because some of the vouchers were not prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived, it is apparently clear that all the dealers/customers who has given the security deposits are genuine". The Ld. A.O in his assessment order did not accept the contention of the assessee because no details of security deposits as to were from it is received were given by the assessee and hence addition of Rs. 8,74,400/- was made. A satisfaction that penalty proceedings u/s 271(1)(c) is being initiated separately is recorded. The assessee was also asked why the addition of Rs. 6,79,875/- made in the original assessment should not be again made. In response to this, assessee submitted that "It is submitted as per the agreement to sale the assessee has purchase 0.25 acre land at Rs. 6,79,875/-. The registry of the same was made for Rs. 2,50,000/- and this amount of Rs. 2,50,000/- ws paid by cheques. The difference of Rs. 6,79,875/- minus Rs. 2,50,000/- comes to Rs. 4,29,875/- which the assessee has surrendered in the return filed u/s 153A and included in the total surrender of Rs. 4,50,000/-. Sir, being the assessee himself declared the on money of Rs. 4,29,875/- in the return filed u/s 153A (out of the total declaration of Rs. 4,50,000/-) and the balance of Rs. 2,50,000/- was ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee(s) in any of the assessment years.. We find that the net profit offered by the assessee for Assessment Year 2001-02 to Assessment Year 2006-07 is at 0.37%, 1.71%, 1.72%, 2.99%, 1.84%, 0.95% and 1.97% respectively. In the case of another assessee i.c. Shri Prem Chawla net profit rate offered for Assessment Year 2001-02 to Assessment Year 2006-07 in the concern M/s Anand Paints is 2.31%, 3.52%, 1.36%, 1.44%, 1.94%, 1.83% and 2.67% respectively and in case of Smt. Sarita Chawla Net Profit Rate of 3.2% and 4.9% is offered for Assessment Year 2005-06 and Assessment Year 2006-07. From perusal of above net profit rate we find that the net profit rate is ranging from 0.37% to 5% approx. It is also not disputed that during the both rounds before the lower authorities the reasons best known to the assessee necessary documentary evidence to prove the genuineness of the purchases and expenses were not placed and books of accounts were claimed to be lost when the proceedings were undergoing before the appellate authorities. The element of "carelessness" on the part of the assessee cannot be refused. However looking to the fact that the issues raised before us are in the second round and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mohar Colony, Bhopal Sir/Madam, Sub: Penalty proceeding u/s. 271(1)(c) of the Income Tax Act 1961 for the AY 2000-01 In connection with the penalty proceedings u/s. 271(1)(c) for the assessment year(s) 2000-01 you are requested to attend my office on 26.03.2013 at 11.00 AM to show cause why penalty should not be imposed. However, if you do not wish to be heard in person in this regard, you may submit your written submissions so as to reach me by the above date which will be considered before disposal of the matter. Sd/- (Virendra Kumar Patel) Asstt Commissisoner of Income Tax-1(2), Bhopal 2.13 That yet another show cause notice dated 25.01.2016 for Assessment Year 2000-2001 for penalty purposes u/s 271(1)(c) was issued to the assessee calling upon him to show cause that why the penalty u/s 271(1)(c) should not be imposed upon him. The assessee was requested to appear on 01.02.2016 before Ld. A.O. It was also stated therein that if assessee does not wishes to be heard in person then in that even he may submit a written explanation/reply which should reach on or before 01.02.2016. It was stated therein that the same would be considered before the matter is disposed off. Cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the order maintaining the part penalty by the CIT (Appeals)-3, Bhopal is unjust, unfair and bad in law as the same was maintained without considering the order of the Assessing Officer as in this case no order passed by the Assessing Officer giving effect to the order of Hon'ble ITAT. 3. That on the facts and in the circumstances of the case, the learned CIT (Appeals)-3, Bhopal erred in confirming the part penalty u/s 271(1)(c) of the Act for concealment of income without considering the fact that the addition confirmed was in the nature of estimated income on which penalty for concealment is not imposable. 4. That on the facts and in the circumstances of the case, the learned CIT (Appeals)-3, erred in confirming the penalty u/s 271(1)(c) on the addition of Rs. 4,29,875/- being undisclosed investment in purchase of land as this amount was already offered by the appellant in the return filed u/s 153A and hence, no penalty is imposable if the assessee suo-motto offered the income in the return. 5. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of the appeal on or before the date of hearing." Additional Grounds of appeal: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not spelt out in the notice(s) for penalty the necessary and material ingredients explicitly and expressly u/s 271(1)(c) of the Act. Further even the "penalty order of Ld. A.O" nothing is expressly set out u/s 271(1)(c) of the Act whether the case made out is under concealment of particulars of income or furnished inaccurate particulars of such income. When no specific charge is mentioned in the notice(s) and in the impugned penalty order with regard to u/s 271(1)(c) of the Act, the entire penalty imposed by Ld. CIT(A) in impugned order deserves to be set aside by this Tribunal. Further law in this regard is fairly settled. The Ld. AR then invited our attention to paper book page 1 to 6 which are copies of notice(s) all dated 19.03.2013 and follow up notice(s) are dated 25.01.2016. Paper book page 7 to 13 that only bare Section 271(1)(c) of the Act is stated and no specific material ingredients of Section 271(1)(c) of the Act is alleged like concealment of particulars of income and/or furnished inaccurate particulars of income. The Ld. AR in so far as issue of quantum was concerned contended that G.P addition of 5% is done that too on estimation finally even by ITAT. Per contra Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or furnishing inaccurate particulars in law. 4. Observations,findings & conclusions. 4.1 We now have to decide the legality, validity and proprietary of the "Impugned Order" basis records of the case and rival contentions canvassed before us. 4.2 We have carefully perused records of the instant case before us for adjudication and adjugment in second appeal. 4.3 At the outset and threshold we have to examine whether in law the assessee is entitled to raise legal issue as and by way of fresh ground about legality of penalty proceedings Under Section 271(1)(c) of the Act basis contentions canvassed before us keeping in mind judgment of Hon'ble Supreme Court of India in case of NTPC v/s CIT reported in 1998 (229) ITR 383 (SC). We have examined the issue and are of the considered view that legal issue whether the penalty proceedings initiated Under Section 271(1)(c) of the Act is correct or not in the instant case is a pure question of law as it does not involve any investigation or inquiry with regard to any fact. The question of law clearly arises from the facts as found by the authorities below and it has bearing on liability of the assessee. Penalty is in addition to tax liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. It was submitted before the Tribunal that the income shown in the return were offered under Section 132 (4) as well as returns filed under Section 153A. These incomes have been accepted in the assessment order without any variation and objection. The blanket penalty proceedings were initiated in all cases under Section 271(1)(c). The penalty notice under Section 274 read with Section 271(1)(c) were issued in the typed format without striking off either of two charges, i.e., which is reproduced as : "* have concealed the particulars of your income or.............or "furnished inaccurate particulars of income". 7. It is submitted that the show-cause notice under Section 274 is not mere empty formality but it has a definite purpose to make the assessee aware of the exact charges against him and the case, which is required to meet out. A clear notice not only a statutory requirement but even for the purpose of principle of 'audi alteram partem' which requires that no one should be condemned unheard, a notice in clear term specifying the clear charges against an assessee is required to be given by an Assessing Officer before imposing a penalty. It was submitted that by n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not specify which limb of Section 271(1)(c) of the Act of 1961, the penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars. The Tribunal while allowing the appeal of the assessee, had relied on the decision of the Division Bench of Karnataka High Court decision in the case of CIT V/s. Manjunatha Cotton Ginning Factory (supra). It is further pointed out that the SLP filed by the Deptt. before the Apex Court on 5.8.2016 in the matter of CIT V/s. SSA'S Emerald Meadows (supra) was dismissed. In the case of CIT V/s. Suresh Chandra Mittal, (2000) 251 ITR 9 (SC), the Apex Court has upheld the decision of M.P. High Court wherein, in similar circumstances, it was held that the initial burden lies on the revenue to establish that the assessee had concealed the income or had furnished inaccurate particulars of such income. In the present case, in show-cause notice the Assessing Officer has not specified specifically charges, there was no such mention. 9. Considering the aforesaid, the Tribunal has held that the penalty levied under Section 271(1)(c) of the Act of 1961 is not sustainable in law, as no specif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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