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TMI Blog2016 (8) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... engaluru arising from penalty order under Section 271(1)(c) of the Income Tax Act, 1961 (in short 'the Act') for the Assessment Year 2009-10. 2. The assessee has raised the following grounds : 1. The order of the learned CIT (Appeals) is opposed to law, facts and circumstances of the case. 2. The order is passed in haste, without providing sufficient and reasonable opportunity of being heard. 3. The order is passed against the principle of natural justice and thus liable to be quashed. 4. The ld. Assessing Officer erred in levying penalty under Section 271(1)(c) and the learned CIT (Appeals) erred in upholding the same. 5. The ld. Assessing Officer and CIT (Appeals) ought to have appreciated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . To Shri Krishna Srivastava, No.1, Alsana Plaza, 10th Main, Jeevan Bhima Nagar, HAL 3rd Stage, Bangalore. Whereas in the course of proceedings before me for the Assessment Year 2009-10 it appears to me that you :- Have concealed the particulars of your income or furnished inaccurate particulars of such income. You are hereby requested to appear before me at my office on 2.2.2012 at 11.30 AM and show cause why an order imposing penalty on you should not be made under section 271 of the Income Tax Act, 1961. If you do not with to avail yourself of this opportunity of being heard in person or through authorized representative, you may show cause in writing on or before the said date which will be considered before any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of VIRGO MARKETING reported in 171 Taxmn 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 proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. INDEPENDENT PROCEEDING 62. The penalty proceedings are distinct from assessment proceedings, and independent therefrom. The assessment proceedings are taxing proceedings. The proceedings for imposition of penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment. It is sufficient, if there is some record somewhere, even apart from the assessment order itself, that the Assessing Officer has recorded his satisfaction that the assessee is guilty of concealment or other default for which penalty action is called for. Indeed, in certain cases, it is possible for the Assessing Officer to issue a penalty notice or initiate penalty proceedings even long before the assessment is completed. There is no statutory requirement that the penalty order should precede or be simultaneous with the assessment order. In point of fact, having regard to the mode of computation of penalty outlined in the statute, the actual penalty order cannot be passed until the assessment is finalised. CONCLUSION 63. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of assessment levying tax and interest and has paid tax and interest that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment order that, it is on account of such unearthing or enquiry concluded by authorities it has resulted in payment of such tax or such tax liability came to be admitted and if not it would have escaped from tax net and as opined by the assessing officer in the assessment order. 1) Only when no explanation is offered or the explanation offered is found to be false or when the assessee fails to prove that the explanation offered is not bonafide, an order imposing penalty could be passed. m) If the explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate 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. Following the decision of the judgment of Hon'ble jurisdictional High Court (supra), we delete the penalty levied under Section 271(1)(c) of the Act for want of a valid show cause notice under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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