TMI Blog2016 (5) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) of the Act have to be held illegal and invalid and are liable to be quashed. Also in the show cause notice issued before imposing penalty u/s 271(1)(c) of the Act, the AO has not struck off the irrelevant portions namely whether the penalty is sought to be levied for furnishing inaccurate particulars of income or for concealing particulars of income. This Tribunal in the case of Suvaprasanna Bhattacharya vs ACIT (2015 (12) TMI 43 - ITAT KOLKATA) has held that imposition of penalty on such defective show cause notice is improper and liable to be cancelled - Decided in favour of assessee. - ITA No. 2482/Kol/2013 - - - Dated:- 20-5-2016 - Shri N. V. Vasudevan, JM And Shri M. Balaganesh, AM For the Appellant: Miss Varsha Jalan, Advocate For the Respondent: Shri A.K.Sinha, JCIT, Sr.DR ORDER Per N. V. Vasudevan, JM This is an appeal by the Assessee against the order dated 12.08.2013 of CIT(A) Siliguri, relating to AY 2009-10. 2. In this appeal the assessee has challenged the order of CIT(A) whereby the CIT(A) confirmed the order of AO imposing penalty on the assessee us/ 271(1)(c) of the Act. 3. The facts and circumstances under which penalty was im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a G.P. of 3.19%, thus an amount of ₹ 73,583/- [3.19% of ₹ 23,06,676/ is added back to the assesse as undisclosed income from suppressed sales. 5. The AO ultimately added the aforesaid sum to the total income of the assessee. 6. In the order of the assessment the AO had not initiated penalty proceedings u/s 271(1)(c) of the Act. Nevertheless the AO proceeded to issue show cause notice to the assessee for imposing penalty u/s 271(1) (c) of the Act. The AO ultimately held that the assessee has deliberately and wilfully furnished inaccurate particulars in the return of income in respect of the additions referred to earlier and imposed penalty of ₹ 13,44,986/- which was 125% of the tax sought to be evaded. 7. On appeal by the assessee the CIT(A) confirmed the order of the AO. Aggrieved by the order of CIT(A) the assessee has preferred the present appeal before the Tribunal. 8. We have heard the submissions of the ld. Counsel for the assessee and the ld. DR. The ld. Counsel for the assessee pointed out that before making the impugned additions the AO had issued show cause notice to the assessee and had also proposed appropriate penal proceedings was prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment the proceedings u/s 271(1)(c) of the Act have to be held illegal and invalid and are liable to be quashed. 10. Apart from the above, we also find that in the show cause notice issued before imposing penalty u/s 271(1)(c) of the Act, the AO has not struck off the irrelevant portions namely whether the penalty is sought to be levied for furnishing inaccurate particulars of income or for concealing particulars of income. This Tribunal in the case of Suvaprasanna Bhattacharya vs ACIT (supra) has held that imposition of penalty on such defective show cause notice is improper and liable to be cancelled. The following are the relevant observations relied in this regard :- 8. The next argument that the show cause notice u/s.274 of the Act which is in a printed form does not strike out as to whether the penalty is sought to be levied on the for furnishing inaccurate particulars of income or concealing particulars of such income . On this aspect we find that in the show cause notice u/s.274 of the Act the 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 particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 pro forma 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 Expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 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 su ..... 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