TMI Blog2016 (3) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... ctively. Penalty levied u/s 271(1)(c) of the act by Assessing Officer separately vide orders dated 29.06.2012. 2. Since common grounds are involved except amount in all these appeals, therefore, we heard them together and deem it appropriate to dispose of them by way of this common order. 3. Except figure the facts in all the appeals are same therefore we are taking the facts of the case for the A.Y 2006-07 as a lead (ITA No.961/Kol/2013) case for the sake of convenience and passing a consolidated order for all the appeals. In all these appeals, assessee has challenged the orders of Ld. CIT(A) whereby Ld. CIT(A) confirming the order of Assessing Officer imposing penalty on the assessee u/s. 271(1)(c) of the Act. The assessee has raised the following grounds of appeal:- 1. That Ld. CIT(A) having admitted that additional income offered u/s. 132(4) was accepted and included in order u/s 153A has erred in holding no immunity from p0enalty is available. 2. That on the acts and in the circumstances of the case, Ld. CIT(A) is wrong in confirming the penalty order by relying to Explanation 5A of Section 271(1)(c) as substituted by Finance (No.2) Act 2009 with retrospective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-08 Rs.1,68,700/- Rs.5 lacs Nil Nil ₹ 6,68,700/- 2008-09 Rs.1,93,250/- Rs.10 lacs Nil Rs.9,45,659/- ₹ 21,38,905/- 2009-10 Rs. Nil Rs.1.30 lacs Nil Rs.3,54,840/- Rs.1,33,54,840/- In assessment orders passed for various AYs, the AO has accepted the income declared by assessee after making some additions and after verifying the books of accounts, other documentary evidence. The AO also initiated penalty proceedings against assessee u/s. 271(1)(c) of the Act by observing as follows:- Penalty proceedings u/s 271(1)(c) has been separately initiated. A show cause notice u/s. 274 of the Act was issued to the assessee for the AYs 2006-07 to 2009-10. The assessee submitted reply to the show cause notice pointing out that the disclosure made by the assessee was voluntary prior to any detection by the revenue and that there was no attempt to conceal particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be proceeded against us/s 271(1)(c) of the Act except recording as follows in the order of assessment viz., Penalty proceeding u/s. 271(1)(c) initiated . According to him the above manner of initiation of penalty proceedings in the order of assessment is not in accordance with law. 7. The learned counsel for the assessee drew out attention to the show cause notice issued u/s. 274 of the Act before imposing penalty and submitted that the said notice doe s not specify as to whether the assessee is guilty of having furnished inaccurate particulars of income or of having concealed particulars of such income . He pointed out that the pointed show cause notice does not strike out the irrelevant portion viz., furnished inaccurate particulars of income or concealed particulars of such income . He drew our attention to a decision of the Hon'ble Karnataka High Court in the case of CIT v. Manjunatha Cotton Ginning Factory (2013) 218 Taxman 423 (Kar.) wherein it was held that if the show cause notice u/s. 274 of the Act does not specify as to the exact charge viz., whether the charge is that the assessee has furnished inaccurate particulars of income or concealed parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 274, they could conveniently refer to the said order which contains 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 provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to initiate penalty proceedings once he is satisfied in the course 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be passed. m) If the explanation offered, even though 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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