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2016 (8) TMI 503 - ITAT BANGALORE

2016 (8) TMI 503 - ITAT BANGALORE - TMI - Penalty order under Section 271(1)(c) - Held that:- We delete the penalty levied under Section 271(1)(c) of the Act for want of a valid show cause notice under Section 274 of the Act. - Decided in favour of assessee. - I.T.A. No.1273/Bang/2015 - Dated:- 30-6-2016 - SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER For The Appellant : Shri Zain Khan, C.A. For The Respondent : Smt. P. Renugadevi, JCIT ORDER Per Shri Vijay Pal Rao .....

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pportunity of being heard. 3. The order is passed against the principle of natural justice and thus liable to be quashed. 4. The ld. Assessing Officer erred in levying penalty under Section 271(1)(c) and the learned CIT (Appeals) erred in upholding the same. 5. The ld. Assessing Officer and CIT (Appeals) ought to have appreciated that the appellant has neither concealed any income nor furnished inaccurate particulars of such income. 6. The learned CIT (Appeals) failed to take cognizance of the f .....

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t the show cause notice under Section 274 of the Act is not valid in view of the Hon'ble jurisdictional High Court in the case of CIT Vs. Manjunatha Cotton & Ginning Factory & Others 359 ITR 565 (Kar.) 4. We have heard the learned Authorised Representative as well as learned Departmental Representative and considered the relevant material on record. The learned Authorised Representative of the assessee has filed a copy of the show cause notice issued under Section 274 r.w.s. 271 dt.2 .....

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appears to me that you :- Have concealed the particulars of your income or furnished inaccurate particulars of such income. You are hereby requested to appear before me at my office on 2.2.2012 at 11.30 AM and show cause why an order imposing penalty on you should not be made under section 271 of the Income Tax Act, 1961. If you do not with to avail yourself of this opportunity of being heard in person or through authorized representative, you may show cause in writing on or before the said dat .....

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re, we find that this case is covered by the Hon'ble jurisdictional High Court in the case of Manjunatha Cotton & Ginning Factory & Others (supra) wherein the Hon'ble High Court has held in paras 61 to 63 as under : 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, furnis .....

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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 concealment, 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 clause .....

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unt of penalty. Also separate appeal is provided against order of imposition of penalty. Above all, normally, assessment proceedings must precede penalty proceedings. Assessee is entitled to submit fresh evidence in the course of penalty proceedings. It is because penalty proceedings are independent proceedings. The assessee cannot question the assessment jurisdiction in penalty proceedings. Jurisdiction under penalty proceedings can only be limited to the issue of penalty, so that validity of t .....

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ssment order that penalty proceedings are being initiated, this is more a matter of convenience than of legal requirement. All that the law requires, so far as the penalty proceedings are concerned, is that they should be initiated in the course of the proceedings for assessment. It is sufficient, if there is some record somewhere, even apart from the assessment order itself, that the Assessing Officer has recorded his satisfaction that the assessee is guilty of concealment or other default for .....

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CLUSION 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 sh .....

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n to initiate proceedings under Section 271(l)(c) is a sine qua non for the Assessment Officer to initiate the proceedings because of the deeming provision contained in Section 1(B). h) The said deeming provisions are not applicable to the orders passed by the Commissioner of Appeals and the Commissioner. i) The imposition of penalty is not automatic. j) Imposition of penalty even if the tax liability is admitted is not automatic. k) Even if the assessee has not challenged the order of assessmen .....

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y when no explanation is offered or the explanation offered is found to be false or when the assessee fails to prove that the explanation offered is not bonafide, an order 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 .....

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