TMI Blog2016 (4) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The appellant craves its right to add to or alter the grounds of appeal at any time before or during the course of hearing of the case. 3. The assessee has also taken the following additional ground : There is no clear satisfaction by the AO whether he is satisfied for concealment or income or whether for submission of inaccurate particulars and hence the levy of penalty is invalid. 4. The Ld. Counsel for the assessee referring to the additional ground submitted that the said ground is purely a legal ground and no fresh facts are required to be investigated. Relying on the decisions of Hon ble Supreme Court in the case of NTPC Ltd. reported in 229 ITR 383 and in the case of Jute Corporation of India Ltd. reported in 187 ITR 688 and the decision of Hon ble Bombay High Court in the case of Ahmedabad Electricity Company reported in 199 ITR 351 he submitted that the additional ground raised by the assessee should be admitted. 5. After hearing both the sides and considering the additional ground raised by the assessee being purely legal in nature, the additional ground raised by the assessee is admitted for adjudication. 6. Facts of the case, in brief, are that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought to be evaded. In appeal the Ld.CIT(A) upheld the penalty so levied by the AO. 10. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 11. The Ld. Counsel for the assessee at the outset submitted that there is no clear satisfaction by the AO as to whether he is levying penalty for concealment of income or for furnishing of inaccurate particulars of income. Referring to the copy of the assessment order he drew the attention of the Bench to para 10 of the order which reads as under : 10. The penalty proceedings u/s.271(1)(c) of the I.T. Act, 1961 for concealing the particulars of income and furnishing inaccurate particulars of such income are separately initiated. 12. Referring to bottom of the assessment order he submitted that the AO has again mentioned to issue notice u/s.274 r.w.s. 271(1)(c) of the I.T. Act for concealment of income as discussed in the body of order. Referring to the notice issued u/s.274 r.w.s. 271(1)(c) vide letter dated 22-03-2012 he submitted that here also there is no mention as to whether the penalty has been levied for concealment of income or for furnishing of inaccurate particulars of income. 13. Referring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also, no penalty is leviable since the addition is based on a paper seized from third party and the AO has not made proper verification by issue of notice to any of the landlords. He accordingly submitted that penalty cannot be levied u/s.271(1)(c) of the I.T. Act. 16. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). He submitted that the quantum addition has been upheld by the Tribunal. The assessee has not disclosed the amount of investment in cash in its books of account for which addition was made by the AO which has been upheld by the CIT(A) and further by the Tribunal. Therefore under these circumstances levy of penalty u/s.271(1)(c) of the I.T. Act is justified. 17. As regards the reliance on the decision of the Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (Supra) is concerned for treating the notice u/s.274 as bad in law for not clearly mentioning the reasons for levy of penalty he submitted that the decision of Hon ble Supreme Court in the case of Mak Data Pvt. Ltd. Vs. CIT reported in 358 ITR 593 is applicable. Referring to para 10 of the order he submitted that the Hon ble Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been upheld by the CIT(A). 19. The first plank of argument of the Ld. Counsel for the assessee is regarding the validity of the penalty order in view of an invalid notice for levy of penalty. According to him in para 10 of the assessment order the AO has initiated penalty proceedings u/s.271(1)(c) of the I.T. Act, 1961 for concealing the particulars of income and furnishing of inaccurate particulars of such income. Even at the end of the assessment order the AO mentions issue notice u/s. 274 r.w.s. 271(1)(c) also of the Act, 1961 for concealment of income as discussed in the body of the assessment order. Further the notice dated 22-03-2012 for penalty proceedings u/s. 271(1)(c) does not speak clearly as to whether such penalty is being levied for concealment of income or furnishing of inaccurate particulars of income. Therefore, according to him, in view of the decision of Hon ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (Supra) which has been followed by the Coordinate Bench of the Tribunal in the case of Sanjog Tarachand Lodha (Supra) such penalty notice is bad in law where it is not clear from the notice u/s.274 about the reasons for levyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome returned by the assessee. Thus, no further addition was made during the course of assessment proceedings. Penalty u/s. 271(1)(c) was initiated against the assessee on the additional income admitted during search and returned u/s. 153A proceedings. The 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 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. In support of these submissions, reliance has been placed on the decision of Hon'ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton Ginning Factory reported as 359 ITR 565 (Karan). 6. A perusal of the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gorically records a finding regarding the existence of any said grounds mentioned therein and then penalty proceedings is initiated, in the notice to be issued under Section 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 form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law when the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the imposition of penalty cannot validate the order of penalty which, when passed, was not sustainable. 61. The Assessing Officer is empowered under the Act 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 Gujrat 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 Taxmn 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 concealmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under Section 271 read with Section 274 of the Income Tax Act, 1961. Therefore, the reliance only on the sentence appearing in para 10 of the judgement without reading it in the context under which said observation was made in para 9 is misplaced by the Ld. Departmental Representative. 24. A plain reading of the decision of Hon ble Supreme Court from para 9 and 10 combinedly suggest that the satisfaction need not be recorded in a particular manner but from a reading of the assessment order as a whole such satisfaction should be clearly discernible. Therefore, the reliance by the Ld. Departmental Representative on the decision of Mak Data Pvt. Ltd. in our opinion is misplaced and not applicable to the facts of the present case. This view of ours finds support from the decision of Kolkata Bench of the Tribunal in the case of Suvaprasanna Bhataacharya Vs. ACIT in ITA No.1303/Kol/2010 order dated 06-11-2015 for A.Y. 2006-07. In this view of the matter, we are of the considered opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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