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2016 (10) TMI 935 - ITAT KOLKATA

2016 (10) TMI 935 - ITAT KOLKATA - TMI - Penalty u/s 271(1)(1) - validity of notice - there is no mention in the SCN, whether the assessee was guilty of having “furnished inaccurate particulars of income” or of having “concealed particulars of such income” - Held that:- The show-cause notices issued by the Assessing Officer under section 274 for the years under consideration not being in accordance with law, the penalty orders passed by the Assessing Officer in pursuance thereof are liable to be .....

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the assessee are directed against four separate orders, all dated 30.01.2015 passed by the ld. Commissioner of Income Tax (Appeals)-20, Kolkata, whereby he confirmed the penalties of ₹ 5,44,377/-, ₹ 7,28,402/-, ₹ 13,21,733/- and ₹ 15,01,410/- imposed by the Assessing Officer under section 271(1)(c) for assessment years 2007-08, 2008-09, 2009-10 & 2010-11 respectively. 2. The assessee in the present case is an individual, who derives income from business and other sour .....

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eed that the transactions reflected in the said Bank account were not accounted for by him. He also agreed to surrender his undisclosed income on account of such transactions. In the returns of income filed originally in response to the notices issued by the Assessing Officer under section 153A of the Act for all the four years under consideration, the assessee, however, did not offer or disclose any amount of such income surrendered during the course of search in respect of the transactions ref .....

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onal income offered by the asessee on account of the transactions reflected in his undisclosed Bank account with IDBI, Gariahat Road Branch, Kolkata as found during the course of search, as the concealment on the part of the assessee and initiated penalty proceedings under section 271(1)(c). The explanation offered by the assessee in reply to the notices issued by him during the course of penalty proceedings was not found acceptable by the Assessing Officer and he proceeded to impose penalties o .....

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nvented during search & seizure u/s.132 and the assesse admitted the fact with clarification that the said bank account has never been considered to determine his income for any year till the date of search & seizure. (ii) Though the assessee had admitted the fact of not disclosing the bank account no.086104000105095 during search & seizure u/s.132(4) yet, he had not shown an iota of willingness to disclose the said bank account in his return of income filed u/s.153A in consequence o .....

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any extra time to file the return u/s. 153A, ultimately filed after inordinate delay on 06.03.2013 and revised it on 21.03.2013. Thus the returned income filed u/s. l53A is not in time as permitted by the notice u/s.153A or belated return. (iv) The case of the assesse is fully covered by the clause (i) below Explanation 5A to the section 271(1)(c) of I.T. Act, 1961 hence, the assessee in respect of year wise income has been deduced from the transactions of undisclosed bank account no.08610400010 .....

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ed by the Assessing Officer under section 271(1)(c) for all the four years under consideration for the following reasons given in paragraph no. 5 of his impugned order passed for A.Y. 2007-08, which are identical for the remaining three years as well :- 5. I have considered the facts of the case and perused the material on record. I find that search u/s 132 was conducted on 12-07-2010 at the residential premise of the assessee thereby resulting in the recovery of unaccounted cash of ₹ 35 l .....

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8377; 15,71,724/- for the relevant assessment year 2007-08 on account of undisclosed bank account before the DDIT(Inv) but did not include the same in his return filed on 06-03-2012 in response to the notice u/s 153A. The assessee vide notice u/s 142(1) issued on 03-10-2012 by the AO was inquired about his bank account with the IDBI Bank. The assessee then admitted before the AO that the bank account with the IDBI Bank was not disclosed in his returns and offered additional income of ₹ 1,3 .....

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k account with the IDBI Bank that he eventually surrendered the undisclosed income by filing the revised return. I also find merit in the finding of the AO that the revised return filed by the assessee was legally invalid. The material on record suggested that the notice u/s 153A was served on 10-10-2011 thereby requiring the assessee to submit his return within 30 days. The assessee in response neither sought extension of time for filing the return nor did he file the return within the enquired .....

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uently the assessee was not lawfully competent to file the revised return. I uphold the finding of the AO that the revised return filed by the assessee on 2103-2013 was not valid in law. The assessee therefore cannot be permitted to argue that he had declared the undisclosed income of ₹ 15,71,724/- in his return. The Ld AR has argued before me that the assessee voluntarily admitted the undisclosed income and so there was no lawful case for levy of penalty u/s 271(1)(c). I however having co .....

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stead of admitting its ownership initially tried to shift onus by claiming that the money belonged to the KPC Medical College & Hospital. I find that no disclosure of undisclosed income was made by the assessee at the time of the search. The assessee admitted before the DDIT (Inv] undisclosed income of ₹ 175 lakhs for the assessment years 2007-08 to 2011-12 but later did not honour his commitment while furnishing his returns for those years in as much as the undisclosed income admitted .....

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clusion that the assessee consciously and deliberately made all attempts to conceal the particulars of his income with the sole objective of evading tax. I note that the assessee did so even when incriminating material was recovered in the search and undisclosed income embedded therein had been unearthed by the income tax department. I therefore reject the argument of the assessee that the surrender of undisclosed income was voluntarily made by him. I find on the contrary that the series of even .....

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income of ₹ 15,71,724/- for the previous year 2006-07 which had ended before the date of the search and such income had not been declared in the return for the previous year 2006-07 furnished before the date of the search and consequently, notwithstanding that such income was declared by him in any return furnished after the date of the search, the assessee for the purposes of levy of penalty u/s 271(1)(c) shall be deemed to have concealed the particulars of his income or furnished inaccur .....

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d by the assessee as his undisclosed income. The unaccounted income represented by the undisclosed bank account was determined on the basis of the transactions made through the bank account. The break-up of the disclosure made by the assessee and the computation of income made by the AO in the impugned order clearly suggested that the undisclosed income was meticulously worked out on the basis of the material found in the search. I therefore reject the argument that the assessment was made on th .....

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sibly be extended to mean the due date for filing the return u/s 139(4). But even otherwise, it is the clause (a) which is applicable in the case of the assessee. The judicial decisions cited by the Ld AR are not relevant to the facts of the case. In view of the above, I uphold the finding of the AO that the assessee has concealed the particulars of his income and has also furnished inaccurate particulars of such income. The impugned penalty order is upheld. The grounds raised by the assessee ar .....

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assessee by the various decisions of this Tribunal, the request of the ld. D.R. for adjournment is not acceded to. These appeals of the assessee are accordingly being disposed of ex-parte qua the respondent-Revenue after hearing the arguments of the ld. Counsel for the assessee and perusing the relevant material on record. 5. The ld. Counsel for the assessee has raised a preliminary issue challenging the validity of the penalty orders passed by the Assessing Officer for all the four years under .....

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as invited our attention to the show-cause notices issued by the Assessing Officer for all the four years under consideration under section 274 in the printed form to point out that the irrelevant portion, viz. furnished inaccurate particulars of income or concealed particulars of such income was not struck off by the Assessing Officer. In this regard, it is observed that the Coordinate Bench of this Tribunal in the case of Suvaprasanna Bhattacharya -vs.- ACIT (ITA No. 1303/KOL/2010) cited by th .....

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r dated 06.11.2015, which read as under:- 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 .....

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rtain printed form where all the grounds given in section 271 are given would not satisfy the requirement of law. The Court has also held that initiating penalty proceedings on one limb and find the assessee guilty in another limb is bad in law. It was submitted that in the present case, the aforesaid decision will squarely apply and all the orders imposing penalty have to be held as bad in law and liable to be quashed. 8.2 The Hon ble Karnataka High Court in the case of CIT & Anr. v. Manjun .....

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74, 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 Secti .....

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ement 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 .....

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ither 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 penalty proceedings should be confined only to those grounds and the said grounds have to be specifically stated so that the assessee would have the opportunity to meet those grounds. After, he places his version and tries to substantiate his claim, if at all, penalty is to be im .....

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sed on the same ground. Where the basis of the initiation of penalty proceedings is not identical with the ground on which the penalty was imposed, the imposition of penalty is not valid. The validity of the order of penalty must be determined with reference to the information, facts and materials in the hands of the authority imposing the penalty at the time the order was passed and further discovery of facts subsequent to the imposition of penalty cannot validate the order of penalty which, wh .....

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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 unc .....

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lty 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 o .....

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ent 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 assessment levying tax and interest and has paid tax and interest that by itself would not b .....

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when the assessee fails to prove that the explanation offered is not bona fide, an order imposing penalty could be passed. m) If the explanation offered, even though not substantiated by the assessee, but is found to be bona fide 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 .....

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ending 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 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 pro .....

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