TMI Blog2015 (7) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... ated:- 3-7-2015 - Shri N.V. Vasudevan and Shri Jason P. Boaz , JJ. For the Petitioner : Mrs. Sheetal Borkar, Advocate For the Respondent : Shri P. Dhivahar, Jt. CIT(DR) ORDER Per Bench ITA Nos.992 to 996/Bang/14 are appeals against the common order dated 16.04.2014 of CIT(Appeals)-I, Bangalore relating to assessment years 2004-05 to 2008-09. 2. In all these appeals, the assessee has challenged the order of the CIT(Appeals) confirming the orders of the Assessing Officer imposing penalty u/s. 271(1)(c) of the Income Tax Act, 1961 (Act) on the assessee. 3. The facts and circumstances under which penalty u/s. 271(1)(c) of the Act was imposed by the AO on the assessee are as follows. 4. The assessee is an individual. In the course of assessment proceedings for the A.Y. 2004-05, it transpired that the assessee had deposited monies in a cumulative deposit scheme with the National Cooperative Bank Ltd. and the same had not been disclosed in the returns of income filed by the assessee. The deposits had been made in the previous year relevant to A.Y. 2004-05. This deposit earned interest income in A.Y. 2004-05 and the subsequent A.Ys. 2005-06 to 2008-09. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the Assessment years in these appeals, is common and it reads as follows:- 1. The Assessing Officer having issued the notice under section 274 read with section 271(1)(c) of the Act in a mechanical manner, the penalty order passed under section 271(1)(c) of the Act is not sustainable in the eye of law. 2. The Appellant begs to submit that the decision of the jurisdictional High Court in the case of CIT vs. Manjunatha Cotton Ginning Factory (2013) 359 ITR 565 (Karn) is squarely applicable and therefore the impugned order of the authorities below is required to be set aside. 8. The additional ground being a pure question of law which can be decided on the basis of facts available on record is admitted for adjudication keeping in view the decision of the Hon ble Supreme Court in the case of NTPC, 229 ITR 383 (SC). 9. We deem it appropriate to consider the objections raised by the assessee on the validity of the orders imposing penalty on the ground that the show cause notice issued u/s. 274 of the Act was defective for all the assessment years involved in these appeals. 10. On the above objections, we have heard the parties at length. A copy of the show ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontains the satisfaction of the authority which has passed the order. However, if the existence of the conditions could not be discerned from the said order and if it is a case of relying on deeming provision contained in Explanation-1 or in Explanation- 1(B), then though penalty proceedings are in the nature of civil liability, in fact, it is penal in nature. In either event, the person who is accused of the conditions mentioned in Section 271 should be made known about the grounds on which they intend imposing penalty on him as the Section 274 makes it clear that assessee has a right to contest such proceedings and should have full opportunity to meet the case 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pai reported in 292 ITR 11 at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the 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 proforma without striking of the relevant clauses will lead to an inference as to nonapplica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
