TMI Blog2016 (5) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) whereby the Learned CIT(A) has confirmed the order of the Learned AO imposing penalty u/s 271(1)(c ) of the Act. As the issues involved are identical for all these appeals, they are taken up together and disposed off by this consolidated order for the sake of convenience. 3. The facts and circumstances under which penalty was imposed on the Assessee by the AO in the Asst Year 2006-07 are as follows:- The Income Tax Department had conducted search and seizure operations u/s.132(1) of the Act against various persons and business concerns of the Thakur Prasad Sao Group of Chaibasa at different locations of Chaibasa and Kolkata on 23.11.2007. Survey u/s 133A of the Act was also carried out simultaneously at different places of business of the Group at Joda (Orissa), Rourkela (Orissa), Jamshedpur and Tirildih (Jamshedpur). The group is engaged in the mining of iron ore, manufacturing of sponge iron and trading in liquor. In the course of search and seizure operations, Panchanama were drawn in the names of various assesses in the Group including the assessee herein. A disclosure u/s 132(4) of the Act for ₹ 4,99,00,000/- was made by Mr.R.P.Sao, Director of the company for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued u/s 153A of the Act and hence the same should be treated as return filed u/s 139(1) of the Act. Accordingly, he pleaded that no penalty would be exigible on the same. It was further pleaded that there is no finding in the assessment order that there was any concealment of income or furnishing of inaccurate particulars of income with regard to the income returned by the assessee. It was argued that penalty u/s 271(1)(c ) of the Act read with Explanation 5A would apply to the additions made by the Learned AO based on the seized documents or assets found and not on the income returned u/s 153A / 139 of the Act. On first appeal in the penalty proceedings, the Learned CITA held that as per the plain reading of Explanation 5A to section 271(1)(c ) of the Act, any undisclosed income which is found or declared after the date of search initiated u/s 132 of the Act on or after 1.6.2007, the assessee will be liable for penalty on the said amount which is not already declared in the return filed u/s 139(1) of the Act. Hence the Learned CIT(A) held that the assessee shall be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income and acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 particulars of income by striking out the irrelevant portion of printed show cause notice, than the imposition of penalty on the basis of such invalid show cause notice cannot be sustained. 3.6.2. We have given a very careful consideration to the rival submissions. The argument of the Learned AR was that the show cause notice u/s 274 of the Act which is in a printed form and the learned AO has not indicated in the said notice as to whether the penalty is sought to be levied on the assessee for furnishing inaccurate particulars of income or concealing particulars of such income by striking off the irrelevant portion of the printed show cause notice. On this aspect we find that in the show cause notice u/s 274 of the act, the Learned AO has not struck out the irrelevant part. It is therefore not spelt out as to whether the penalty proceedings are sought to be levied for furnishing inaccurate particulars of income or concealing particulars of such income . 3.6.3. The Hon ble Karnataka High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces 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 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 . 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 and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law. It is needless to point out satisfaction of the existence of the grounds mentioned in Section 271(1)(c) when it is a sine qua non for initiation or proceedings, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealment, 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 non-application of mind. The final conclusion of the Hon ble Court was as follows:- 63. In the light of what is stated above, what emerges is as under: a) Penalty under Section 271(1)(c) is a civil liability. b) Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. c) Willful concealment is not an essential ingredient for attracting civil liability. d) Existence of conditions stipulated in Section 271(1)(c) is a sine qua non for initiation of penalty proceedings under Section 271. e) The existence of such conditions should be discernible from the Assessment Order or order of the Appellate Authority or Revisional Authority. f) Even if there is no specific finding regarding the existence of the conditions mentioned in Section 271(1)(c), at least the facts set out in Explanation 1(A) (B) it should be discernible from the said order which would by a legal fiction consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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) Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law . t) The penalty proceedings are distinct from the assessment proceedings. The proceedings for imposition of penalty though emanate from proceedings of assessment, it is independent and separate aspect of the proceedings. u) The findings recorded in the assessment proceedings in so far as concealment of income and furnishing of incorrect particulars would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings. (emphasis supplied) 3.6.5. It is clear from the aforesaid decision that on the facts of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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