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2017 (1) TMI 396 - AT - Income TaxLevy of penalty u/s 271(1)(c) - Concealed particulars of income or furnished inaccurate particulars of income - as per AO assessee has willfully concealed its income and has given inaccurate particulars of income by taking bogus bills - as per CIT(A) AO initiated the penalty u/s 271(1)(c) under both the limbs i.e. concealed the particulars of income and furnished inaccurate particulars of income and at the time of notice u/s 274 he simply has ticked in prescribed proforma concealed particulars of income or furnished inaccurate particulars of income without deleting either limb of penalty Held that:- It is observed that assessment proceedings and penalty proceedings are two separate proceedings. The addition made during assessment proceedings does not lead to conclusion that the assessee was having some undisclosed income or concealed the particulars of income. The addition in assessment order may be because of some technical reasons which do not mean that the assessee had concealed income. Therefore, for imposing a penalty, the AO had to prove that the assessee was having concealed income. The penalty u/s 271(1)(c) of the Act is not automatic and for imposing penalty u/s 271(1)(c) of the Act, the AO had to brought on record any positive material to show that the assessee concealed his income. Hon’ble Karnataka High Court in the case of CIT vs. M/s Manjunatha Cotton & Ginning Factory & Ors.(2013 (7) TMI 620 - KARNATAKA HIGH COURT) held that sending printed form where all the grounds mentioned in section 271 would not satisfy the requirement of law. The assessee should know the ground which he has to meet specifically, otherwise, the principle of natural justice is offended on the basis of such proceedings, no penalty could be imposed to the assessee. As in the case of Tej Bhan Cotton Ginning & Pressing Factory Vs. CIT, Rohtak (2010 (12) TMI 110 - PUNJAB AND HARYANA HIGH COURT ) has held that the Assessing Officer in assessment order has satisfied himself regarding initiation of penalty proceedings, which was tantamount to satisfaction have recorded to the fact on the basis of addition made by the Assessing Officer for concealed income in assessment order. The Hon’ble Court has confirmed the penalty even penalty proceedings initiated by the Assessing Officer by mentioning penalty proceeding for concealing/furnishing of inaccurate particulars of income. The Hon’ble Punjab & Haryana High Court has expressed different view on initiation of penalty proceedings even notice U/s 274 issued by putting oblique between concealing and furnishing of inaccurate particulars of income whereas the Hon’ble Karnataka High Court has held that the Assessing Officer has to satisfy at the time of initiation of penalty proceeding and issuing notice U/s 274 of the Act that whether penalty is for concealed particulars of income or furnishing of inaccurate particulars of income. There were two opinions of the Hon’ble Courts. The Hon'ble Supreme Court has held that in case of two views of the court, favorable view of the assessee would be taken as held in the case of CIT Vs Vegetable Products Ltd. (1973 (1) TMI 1 - SUPREME Court ) and a recent decision in the case of CIT Vs. Vatika Township P Ltd. (2014 (9) TMI 576 - SUPREME COURT ). Therefore, we are of the considered view that initiation of penalty proceedings is not as per law and Assessing Officer did not have any jurisdiction to impose penalty U/s 271(1)(c) of the Act. - Decided in favour of assessee
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