TMI Blog2016 (6) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... inafter referred to as the Act ) vide his order dated 03.12.2012 for assessment year 2010-11. Penalty levied u/s. 271(1)(c) of the Act vide his order dated 21.01.2013. 2. Only issue in this appeal of assessee is that Ld. CIT(A) erred in confirming the penalty imposed by Assessing Officer u/s 271(1)(c) of the Act. For this, assessee has raised following grounds:- 1. For that the penalty under u/s. 271(1)(c)of the Act is opposed to requirement of law and bad in law. 2. For that imposition of penalty R.11,62,260/- u/s. 271(1)(c) of the Act without jurisdiction, opposed to requirement of law and bad in law. 3. For that the imposition of penalty ₹ 11,62,260/- u/s 271(1)(c) of the Act is neither tenable in law nor in facts. 4. For that imposition of penalty at 200% is without basis, arbitrary and bad in law. 3. Briefly stated facts are that assessee is a co-operative society and engaged in the business of contracting activity. During the course of assessment proceeding, Assessing Officer has made the addition to the total income of assessee on account of following:- i) Non disclosure of interest income earned on the FDR of ₹ 19,022/- ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 274 does not spell out the specific charge for the addition made by the AO. He further pointed out that the printed show cause notice does not strike out the irrelevant portion viz., furnished inaccurate particulars of income or concealed particulars of such income . He also pointed out that the order passed by the AO imposing the penalty does not spell out specific charge but just recorded that tax on penalty under section 271(1)(c) of the Act is computed. He drew our attention to a decision of the Hon ble Karnataka High Court in the case of CIT Vs. 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 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. Reference was also made to several judicial pronouncements. In particular, our attention was drawn to a decision of the Hon ble Supreme Court in the case of Price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powered 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der imposing penalty could 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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