Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (7) TMI 616 - ITAT KOLKATA

2016 (7) TMI 616 - ITAT KOLKATA - TMI - Penalty u/s 271(1)(c) - Held that:- The show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. - Decided in favour of assessee - I.T.A No. 2740/Kol/2013 - Dated:- 8-7-2016 - Sri N.V.Vasudevan, JM & Shri M.Balaganesh, AM For The Appellant : Shri V.N.Purohit, FCA For The Respondent : Shri Niraj Kumar, CIT(DR) ORDER Per N.V.Vasudevan, JM This is an appeal by the Assessee agains .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rch and seizure operation carried out by the assessee u/s 132 of the Act in the doctors group of cases. The assessee was one such person who was searched. The assessee is engaged in the business of rendering services relating to infertility and reproductive therapy. In response to the notice u/s 153A of the Act consequent to the search the assessee filed return of income declaring total income of ₹ 4,90,510/-. The assessment was completed by AO accepting the total income returned by the as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as liable to pay penalty. 4. Aggrieved by the order of CIT(A) the assessee has preferred the present appeal before the Tribunal. 5. We have heard the submissions of the ld. Counsel for the assessee and the ld. DR. The ld. Counsel for the assessee filed before us a copy of the show cause notice issued u/s 274 of the Act before imposing penalty u/s 271(1)(c) of the Act. He pointed out that in the said show cause notice, the AO has not indicated as to whether penalty has been imposed for concealing .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the order imposing penalty is nullity. The ld. DR relied on the order of CIT(A). 6. We have considered the rival submissions. We find that the show cause notice does not indicate as to whether penalty was sought to be levied on the assessee for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice is given as an annexure to this order. This Tribunal in the case of Suvaprasanna Bhattacharya vs ACIT (supra) took the following view on the question wh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 . 8.1 The Hon ble Karnataka High Court in the case of CIT & Anr. v. Manjunatha Cotton and Ginning Factory, 359 ITR 565 (Karn), has held that notice u/s. 274 of the Act should specifically state as to whether penalty is being proposed to be imposed for concealment of particulars of income or for fu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ble to be quashed. 8.2 The Hon ble Karnataka High Court in the case of CIT & Anr. v. Manjunatha Cotton and Ginning Factory (supra) has laid down the following principles to be followed in the matter of imposing penalty u/s.271(1)(c) of the Act. NOTICE UNDER SECTION 274 59. As the provision stands, the penalty proceedings can be initiated on various ground set out therein. If the order passed by the Authority categorically records a finding regarding the existence of any said grounds mentione .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

enal 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 pr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fter, he places his version and tries to substantiate his claim, if at all, penalty is to be imposed, it should be imposed only on the grounds on which he is called upon to answer. It is not open to the authority, at the time of imposing penalty to impose penalty on the grounds other than what assessee was called upon to meet. Otherwise though the initiation of penalty proceedings may be valid and legal, the final order imposing penalty would offend principles of natural justice and cannot be su .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of facts subsequent 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

evy 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 pro forma without striking of the relevant clauses will lead to an inference as to nonapplication of mind. The final conclusion of the Hon ble Court wa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ions 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 constitute concealment because of deeming provision. g) Even if these conditions do not exist in the assessment order passed, at least, a d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sessment levying tax and interest and has paid tax and interest that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment order that, it is on account of such unearthing or enquiry concluded by authorities it has resulted in payment of such tax or such tax liability came to be admitted and if not it would have escaped from tax net and as opined by the assessing officer in the assessment order. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lanation 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version