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TMI Blog2017 (2) TMI 1127X X X X Extracts X X X X X X X X Extracts X X X X ..... considered is pertaining to the penalty imposed and confirmed by the Tribunal under Section 271[1][c] of the Act and therefore the facts if any will be required to be considered to that extent. 4. We may record that the Tribunal in the impugned order at paragraphs 4 to 6 has observed thus: "4. On 30.12.2010, notice was issued to the assessee proposing levy of penalty u/s. 271[1][c] of the Act. Contention of the assessee was that he had cooperated with the Department and there was no question of levy of a penalty u/s. 271[1][c] of the Act. However, the AO was not impressed with this reply. According to him, income particulars to the extent of Rs. 22,74,000/- was concealed by the assessee. He levied penalty u/s. 271[1][c] of the Act, at a sum of Rs. 7,65,428/, being 100% of the minimum that could be levied under the said section. 5. Aggrieved assessee appealed before the CIT [A]. Argument of the assessee was that the amount of Rs. 22,74,000/- which represented the cash payment made for the purpose of the property was returned by him when he filed return pursuant to Section 153A. In other words, disclosure was voluntary, to buy peace and hence levy of penalty was unjustified. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present appeal by raising the following substantial question of law. "Whether on the facts and in the circumstances of the case, the Tribunal is right in setting aside the penalty order even though the ingredients of Section 271(1) (c) are satisfied in the case of assessee and assessee had paid tax after unearthing of the income by Revenue in the survey conducted under Section 133A of the I.T.Act.? " 2. We have heard Mr.K.V.Aravind, learned counsel appearing for the appellants - revenue and Mr.Dinesh, learned counsel appearing for the assessee. 3. The learned counsel appearing for both the sides do not dispute the fact that, in view of the subsequent decision of this Court in the case of M/s.Manjunatha Cotton and Ginning Factory reported in (2013) 359 ITR 565 (Kar), the contention raised in the present appeal would no more survive. 4. We may also record that based on the decision in the case of M/s.Manjunatha Cotton and Ginning Factory (supra), today in ITA No.251/2016, we have passed the order which reads as under: Appellant - assessee has preferred the present appeal. However, learned counsel appearing for the appellant after some arguments did not press question Nos.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to accept the contentions of the assessee on the claim of incurring cost of improvement. The onus on the assessee to establish the claim of expenditure incurred, has not been discharged. 6.4.2.On the issue of whether the failure to discharge the onus of proving the claim of expenditure being incurred would entail levy of penalty u/s. 271(1)(c) of the Act, it is settled principle that an addition or / disallowance resulting in increase to the income of the assessee, raises a presumption of concealment of income. It is a rebuttable presumption, which the assessee can rebut by furnishing material evidence to establish its claim. Explanation -1 to section 271(1)(c) of the Act provides that, if a person fails to offer an explanation or the explanation offered by such person is found to be false or the explanation put forth by him is not substantiated and he fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have not been disclosed by him, for the purposes of section 271(1)(c) of the Act, the amount so added or disallowed in computing the assessee's total income is deemed to represent the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed for the addition and the assessment order passed on the basis of this addition, in the absence of any material on record to show concealment of income, it cannot be referred that the said addition is on account of concealment of income. In the case on hand, the penalty has not been levied because the addition was an agreed addition but because the assessee could not furnish any evidence to substantiate its claim of having incurred the expenditure. Hence, we find that the facts of the cited case are different from that of the case on hand and would not be applicable. 6.4.6 We find on perusal of the cited case of K.P.Sampath Reddy (supra) of the Hon'ble Karnataka High Court, that the decision in fact goes against the assessee. In that case the Hon'ble High Court upheld the levy of penalty u/s. 271(1)(c) of the Act observing at para 6 thereof that, "6. We are constrained to reject the assessee's contention. We are pained to note that the Tribunal completely ignored the assessment order which was not based on any concession from the assessee. Concealment of income in the return filed by the assessee is a glaring fact in the instant case. It is not possible to infer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tendered the copy of notice issued to the assessee under Section 271(1)(c) of the Act dated 15.12.2008 for imposition of penalty, which as per the learned counsel for appellant was a part of record in the proceedings before the Tribunal. Learned counsel for the respondent - revenue is unable to dispute that notice dated 15.12.2008 was issued by the Department for imposition of penalty under Section 271(1)(c) of the Act. Hence, said notice for the purpose of consideration is taken on record. Said notice disclose that it is a printed notice and further no specific ground is mentioned, which may show that the penalty could be imposed on the particular ground for which said notice was issued. If the decision of this Court in case of COMMISSIONER OF INCOME-TAX AND ANOTHER vs. MANJUNATHA COTTON AND GINNING FACTORY reported in [2013] 359 ITR 565 (KAR) (supra) is considered, this Court in the said decision had observed at paragraph 63 as under: "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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently the penalty imposed, both would be unsustainable and cannot stand in the eye of law. 12. In the rectification power, the Tribunal at one point of time did observe that since a specific contention was not raised by the assessee before the Appellate Authority, it is a mixed question of law and fact and the same may also be permissible. The relevant observations of the Tribunal are referred in the order passed in M.A.No.62/BANG/15 for rectification and the Tribunal, has not accepted the contention raised therein. 13. It is hardly required to be stated that if the question of law is raised which goes to the root of the matter and for which no undertaking of the factual examination is required, the same could be permitted by the Tribunal. Had it been a case where the notice for penalty was not on record in the proceedings of assessment, the matter might stand on a different footing. In any case, where notice for imposition of penalty under Section 271(1)(c) of the Act was already there on record and when the Tribunal was to examine the applicability of this Court decision in the case of M/s.Manjunatha Cotton and Ginning Factory (supra) and the law laid down, it was a case wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustained in any case such would be a question of facts and it will not be a question of law which may arise for consideration in the present appeal. 7. In the circumstances, the appeal is meritless and is hereby dismissed. Whereas the issue on the question formulated, in our view, need not be answered since the issues are already covered by the decision of this Court in the case of M/s.Manjunatha Cotton and Ginning Factory (supra) Appeal dismissed ." 8. If the facts of the present case are further examined, since in the impugned notice, there is no clear indication about the concealment of the particulars of the income, nor there is clear indication for furnishing of inaccurate particulars of the income on application of mind. In any case as there is no specific ground, hence there would be breach of principles of natural justice and ultimately the order imposing penalty even otherwise also cannot be sustained. 9. Under the circumstances, the question formulated needs to be answered in the negative and in favour of the Assessee and against the Revenue. 10. Resultantly, the Order passed by the Tribunal arising from the order passed by the lower authority for penalty under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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