TMI Blog2016 (4) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... urt ) Thus 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 - ITA No. 878/JP/2013 - - - Dated:- 11-3-2016 - SHRI R.P. TOLANI, JM AND SHRI T.R. MEENA, AM For The Assessee : Shri K.L. Moolchandani (CA) For The Revenue : Shri O.P. Bhateja (Addl.CIT) ORDER PER: T.R. MEENA, AM This is an appeal filed by the appellant against the order dated 10/09/2013 passed by the learned CIT(A), Central, Jaipur for A.Y. 2007- 08. The effective sole ground of appeal raised by the appellant is as under:- On the facts and in the circumstances of the case, the ld CIT(A) has factually and legally erred in upholding the penalty of ₹ 13,00,000/- levied U/s 271(1)(c) of the Act without appreciating the facts of the case in right perspective. The penalty so made and confirmed deserves to be deleted. 2. The sole ground of appeal is against confirming the penalty U/s 271(1)(c) of the Income Tax Act, 1961 (in short the Act) at ₹ 13,00,000. The assessee derived income from salary, house property, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial of inaccurate particulars of income. In absence of any positive material on record, no penalty U/s 271(1)(c) of the Act can be levied as has been held in the case reported in 328 ITR 611 (Del), 76 ITR 696 (SC), 166 CTR (SC) 187, 215 CTR (Raj) 306, 166 Taxman 16. He has requested to drop penalty proceedings U/s 271(1)(c) of the Act. After considering the assessee s reply, the ld Assessing Officer has held that submission or the claim made above, may be correct in respect of estimated additions mentioned above on account of WIP/construction expenses and the other additions are not based on estimation and in the form of additional income declared in return U/s 153A of the Act. The ld AR has not stated in respect of additional income disclosed in the return filed in compliance to notice U/s 153A of the Act and as to why such disclosure should not be considered for imposition of penalty U/s 271(1)(c) of the Act within the meaning of explanation 5A to Section 271(1)(c) of the Act. He has further held that total of such undisclosed income remained deliberately concealed in original return is of ₹ 34,58,898/- in current year. The assessee had failed to disclosed all these income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 5A to Section 271(1)(c) was deeming provision has been inserted w.e.f. 01/6/2007. As per this Section, explanation 5A has been reproduced by the ld CIT(A) and by considering this Section, the assessee has deemed to conceal particulars of income. She further held that this explanation is a non-obstante clause and it is a deeming provision for the purpose of imposition of penalty once the specific conditions are fulfilled. Thus notwithstanding that income from property, Met Life Insurance and electronics items was declared by the appellant in the return filed in response to notice U/s 153A, the appellant would be deemed to have concealed his income as per this explanation 5A to Section 271(1)(c). Since all the three conditions are fulfilled as per explanation 5A to Section 271(1)(c) i.e. search conducted on or after 01/6/2007, unaccounted income disclosed by the assessee has not been disclosed in the original return filed on 01/5/2007. During the course of search, incriminating documents were found, on that basis, the addition has been made, which has been confirmed by the Hon ble ITAT. The AR of the assessee argued before the ld CIT(A) that the return U/s 153A was filed volunt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act as against ₹ 5,88,850/- declared in the original return U/s 139(1) of the Act. The ld Assessing Officer made various additions in initiated the penalty by recording in the penultimate para of the assessment order. Penalty proceedings U/s 271(1)(c) for concealing particulars of income and for furnishing inaccurate particulars of income are initiated . During the course of initiation of penalty proceedings, the ld Assessing Officer has not mentioned Explanation 5A inserted to Section 271(1)(c) of the Act, thus penalty has not been initiated within the meaning of Explanation 5A. Formal show cause letter in a cyclostyled form ticking therein the nature of the default as 271(1)(c) of the Act was issued for concealed particulars of income or furnished inaccurate particulars of income. The final income was determined by the Assessing Officer after appeal effect at ₹ 34,58,898/- as against the returned income u/s 153A at ₹ 31,25,450/-. A show cause notice was again issued by the Assessing Officer on 31/1/2012 for imposing of penalty U/s 271(10(c) without specifying the satisfaction whether penalty proceedings were for concealment particulars of income or furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Hon ble ITAT Mumbai G Bench (2013) 158 TTJ (Mum) 120. The operative portion of the order is reproduced as under:- Para No. 6 of the order: The learned Commissioner (Appeals), though did not accept the assessee s explanation on Explanation 5A to section 271(1)(c), but deleted the penalty on the ground that the income which was offered was only on estimate basis, therefore, additional income offered by the assessee can neither be held to be concealed income or furnishing of inaccurate particulars of income .. I am inclined to agree with the assessee that in spite assessee s case not being covered by the immunity provided under explanation 5A to section 271(1)(c) I hold that even if the assessee is not in a position to establish conclusively that additional income was offered by him voluntarily but at the same time I find that AO has also not been able to identify the very foundation on the basis of which assessee had offered additional income. The AO neither in the course of assessment proceedings nor in the penalty proceedings has been able to link declaration of additional income with any material found even in the course of search. On that basis the ld AR has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74 is defective as such ld Assessing Officer ticked without specifically mentioned that penalty proceeding has been initiated for concealed particulars of income or furnished inaccurate particulars of income. He further referred recent decision of Hon ble Kolkata ITAT Tribunal in the case of DCIT Vs Pratap Properties Pvt. Ltd. ITA Nos. 1386 to 1388/Kol/2010 order dated February, 10, 2016 and prayed to delete the penalty confirmed by the ld CIT(A). 5. At the outset, the ld DR has vehemently supported the order of the ld CIT(A) and further argued that the ld Assessing Officer has initiated penalty proceedings in the assessment order for concealing particulars of income or furnishing inaccurate particulars of income in last para and also on top of page 21 i.e. from the above it can be reasonably inferred that the assessee has concealed particulars of income and has furnished inaccurate particulars of income within the meaning of Section 271(1)(c). I am satisfied that it is a fit case for initiation of penalty proceeding U/s 271(1)(c) and the same are being initiated below . Thereafter various notices issued to the assessee and in penalty order also, the Assessing Officer has impos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary, indication in the order of assessment regarding initiation of penalty proceedings itself tantamounted to satisfaction having regard to facts and circumstances of a case. The jurisdictional requirement for penalty was existence of satisfaction and when existence of satisfaction was clear, the format in which satisfaction was recorded or reflected could not affect the validity of levy of penalty. In view of the judgment of this court in Pearey Lal Sons (EP) Ltd s case (supra), the view taken by the Tribunal cannot be held to be erroneous. The ld DR further referred decision of Hon ble ITAT Jaipur Bench in the case of M/s Grass Field Farms Resorts Pvt. Ltd. Vs. DCIT in ITA No. 730/JP/2011 A.Y. 2006-07 order date 27/10/2015 wherein penalty was confirmed by the Third Member on purchase price of land was recorded on less value, which was detected by the revenue as a result of survey. He further relied on the decision in the case of CIT-II, Kolkata Vs Balarampur Chini Mills Ltd. (2015) 64 taxmann.com 91 (Kol) wherein the Assessing Officer disallowed certain expenses on the basis of evidence filed during the course of search, penalty imposed by the Assessing Officer held valid. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aled the particulars of income and furnished inaccurate particulars of income but 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 even he has not put and in the notice itself between two limbs. The amended provisions of Sub-section (1B) of Section 271 has been considered by the Hon'ble Delhi High Court in the case of Madhu Shree Gupta vs. UOl, 317 ITR 107 wherein it has been held that at the stage of initiation of penalty proceedings, the order passed by the Assessing Officer need not reflect satisfaction vis a vis each and every item of addition or disallowance if the overall sense gathered from the order is that a further prognosis is called for. It would be sufficient compliance with the law that there is a prima facie evidence for concealment of particulars of income or furnishing inaccurate particulars of income. Even after this section, the Assessing Officer has to satisfy the particular limb of initiation of penalty imposable U/s 271(1)(c) of the Act at the time of assessment proceedings. The Hon ble Karnataka High Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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