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2015 (9) TMI 1011 - ITAT PUNE

2015 (9) TMI 1011 - ITAT PUNE - TMI - Levy of penalty u/s. 271(1)(c) - additional income admitted during search and returned u/s. 153A proceedings - Held that:- Furnishing of inaccurate particulars of income and concealing of income are two different expressions having different connotations. For initiating penalty proceedings, the Assessing Officer has to be very specific for the reasons of levying penalty, Whether it is for furnishing of inaccurate particulars of income or concealing of income .....

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have not been specified. The assessee in his written submission has pointed out that if the irrelevant columns of the printed form of notice u/s. 274 have not been stuck off by the Assessing Officer, the notice for levy of penalty u/s. 271(1)(c) shall be deemed to be invalid.

The Hon'ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton & Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT ) has held that where it is not clear from the notice u/s. 274 the reasons for .....

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nfirming the levy of penalty for the assessment years 2007-08 and 2008-09. Both the impugned orders are dated 07-02-2014. Since, the facts in both the appeals are similar, the appeals are taken up together for adjudication. 2. The brief facts of the case are The assessee is an individual. A search u/s. 132 was conducted at the business and residence premises of the assessee on 21-05-2009. Consequent to search action, a notice u/s. 153A was issued to the assessee for the impugned assessment years .....

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original return of income filed u/s. 139. The additional income declared in return of income filed u/s. 153A was ₹ 1,36,520/-. The return filed by the assessee u/s. 153A in both the impugned assessment years were accepted by the Assessing Officer without making any further addition. Penalty proceedings u/s. 271(1)(c) were initiated against the assessee. For the assessment year 2007-08 penalty of ₹ 2,46,270/- and in assessment year 2008-09 penalty of ₹ 35,470/- was levied u/s. .....

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the Tribunal for both the assessment years i.e. assessment years 2007-08 and 2008-09. 3. None appeared on behalf of the assessee. However, the assessee has filed written submission, the copy of same has been supplied to the opposite side. The written submissions of the assessee are taken on record. The written submissions filed by the assessee are as under: SUBMISSION: 1) Under the facts and circumstances of the case learned CIT(A) erred in sustaining the penalty levied by the AO [ITO (Central)- .....

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ticulars of income or for any other reason as irrelevant columns of the printed form of notice u/s. 274 have not been struck off by the AO. Therefore, penalty levied u/s 271(l)(c), in pursuance of invalid notice, may please be deleted. Our view stands fortified by decision of Hon'ble Karnataka High Court in CIT V. Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565 (followed in K.P. Shetty vs. ACIT, ITA No. 265/Bang./2014): HELD: "Notice u/s 274 r.w.s. 271(l)(c) should specifical .....

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to be strictly construed, notice issued under Section 274 should satisfy the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended if the show cause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee. 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 .....

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, in the assessment order for merely on the ground that "the additional income of ₹ 792190/- is detected and disclosed by the assessee as a result of search action" without recording any objective satisfaction or finding in the assessment order to the effect that there is Concealment or furnishing of inaccurate particulars of income. Therefore it is prayed to cancel the penalty levied u/s 271(l)(c). Without prejudice to above, 3.1) Penalty was initiated in para 6 of the assessmen .....

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s, in absence of specific finding as to the exact nature of offence, it is prayed to cancel the penalty levied u/s 271(l)(c). 3.4) Our view stands fortified by the decision of CIT V. Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565 (Kar.) HELD "Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. But, drawing up penalty proceedings for one offence and finding the assessee guilty of another off .....

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under:- "In view of the above facts, it is clear that the assessee concealed income/furnished inaccurate particulars of income. I, therefore, consider it a fit case for levy of penalty under Section 271(l)(c)" The Hon'ble Gujrat High Court in the above case held that, where the Assessing Officer in order of penalty did not come to a clear finding regarding the penalty being imposed on concealment of income or on furnishing inaccurate particulars of income, the Tribunal was justifie .....

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which of two defaults, [i.e., assessee has concealed particulars of his income or furnished inaccurate particulars of such income] have been committed by assessee and only when assessee is put to that defence penalty under Section 271(l)(c) can be imposed Held, yes - DCIT vs. B.J. D. Paper products [2012] 17 taxmann.com 11 (Luck.) Held: In case of imposition of penalty under Section 271(l)(c), it is incumbent upon the Assessing Officer to come to a positive finding as to whether there was conce .....

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However, the learned CIT(A) safely neglected and failed to rebut the same in his order, for the reasons best known to him. In view of the above, kindly allow the appeal of the appellant on merits and oblige. If your Honours want to decide otherwise, a further opportunity of being heard may please be allowed. Further, owing to the exact identical facts and circumstances of the case, it is requested to decide the appeal for A.Y. 2008-09 [689/PUN/2014] also on the similar lines. 4. On the other han .....

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has rightly invoked the provisions of Explanation 5A to section 271(1)(c). The ld. DR prayed for dismissing the appeals of the assessee and upholding the impugned orders. 5. We have heard the submissions made by the ld. DR and have thoroughly perused the written submission along with paper book filed by the assessee. A search and seizure action u/s. 132 of the Act was conducted on 21-05-2009 in the case of Lodha Group. Pursuant to notice issued u/s. 153A, the assessee filed his return of income .....

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assessee has placed on record notices issued u/s. 271(1)(c) r.w.s. 274 of the Act for levy of penalty in the assessment years 2007-08 and 2008-09. The said notices are at pages 15 and 16 of the paper book. A perusal of notices show that they are stereo type notices, with blank spaces. Specific reasons for levy of penalty u/s. 271(1)(c), whether it is for concealment of particulars or for furnishing inaccurate particulars or for both, have not been specified. The assessee in his written submissi .....

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ty shows, that in para 2 the Assessing Officer has specifically mentioned that penal proceedings u/s. 271(1)(c) are initiated for concealing the income. The relevant extract of para 2 of the order levying penalty reads as under: 2. ……….Since assessee had originally concealed income to the extent of ₹ 7,92,190/-, penalty proceedings u/s. 271(1)(c) of the Act was initiated on finalization of assessment proceedings. In both the impugned assessment years, the order levying .....

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p;…. Furnishing of inaccurate particulars of income and concealing of income are two different expressions having different connotations. For initiating penalty proceedings, the Assessing Officer has to be very specific for the reasons of levying penalty, Whether it is for furnishing of inaccurate particulars of income or concealing of income or for both. In the present case, a perusal of notice issued u/s. 271(1)(c) r.w.s. 274 shows that the Assessing Officer has not specified the reason .....

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u/s. 274 the reasons for levying of penalty the notice itself is bad in law and the penalty order passed on the basis of such notice is not sustainable. The relevant extract of the order of Hon'ble High Court reads as under: NOTICE UNDER SECTION 274 59. As the provision stands, the penalty proceedings can be initiated on various ground set out therein. If the order passed by the Authority categorically records a finding regarding the existence of any said grounds mentioned therein and then .....

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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 form where al .....

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n the basis of such proceedings, no penalty could be imposed on the assessee. 60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two offences but in such cases the initiation of the penalty proceedings also must be for both the offences. But drawing up penalty proceedings for one offence an .....

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version and tries to substantiate his claim, if at all, penalty is to be imposed, it should be imposed only on the grounds on which he is called upon to answer. It is not open to the authority, at the time of imposing penalty to impose penalty on the grounds other than what assessee was called upon to meet. Otherwise though the initiation of penalty proceedings may be valid and legal, the final order imposing penalty would offend principles of natural justice and cannot be sustained. Thus once .....

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