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TMI Blog2017 (10) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in the notice." 3. After hearing both the parties, the additional ground being a purely legal ground, the same was admitted for adjudication. 4. Briefly the facts of the case are that the assessee has sold a flat No. 1 in the building known as 'Ramesh Mahal' at Mumbai during the year under consideration. However, the assessee did not disclose income by way of long-term capital gains in his original return of income filed on 06.01.2012. During the assessment proceedings, the assessee's A/R stated that as the return was a belated one, the same was not eligible for rectification. He further stated that the assessee suffered huge losses in business and was mentally disturbed due to which the assessee failed to disclose the transaction of the sale of immovable property and submitted a revised computation of total income incorporating capital gains of Rs. 53,25,629. The AO computed the long term capital gains with a minor adjustment of Rs. 2,362 as under: Sale consideration Rs. 1,50,00,000/- Less: Transfer expenses Rs. 37,500/- Rs. 1,49,62,500/- Less: Indexed cost F.Y. 2005-06 3180320 x 497- Rs. 45,49,713 Cost of improvement F.Y. 2005-06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argely reiterated the same submissions as before the Assessing Officer. The issue to be examined is whatever the disclosure is voluntary or not. It is seen that during assessment proceedings there has been non-compliance to the notices and assessee has responded only after notice dated wherein specific query regarding the details of immovable properties has been made. Further, while at the time of assessment due to losses in business but no mention of return being filed by wife and unskilled person was made. The AR in his submission states, 'after receipt of notice u/s 143(2) the AR of the appellant examined the Bank Statement and other relevant records and it has come to his knowledge that a flat of Mumbai has been sold during the relevance previous year which has not been disclosed in the relevant return of income' which means that but for the notice making a specific query regarding the immovable properties, this transaction would never have been disclosed to the department. It has been observed in the case of Deepak Construction Company vs. CIT 164 Taxmann.com 334 (Gujarat) "After the notice dated 24.02.1986 was served upon the assessee, he came out of his slumber, starte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the discussion as above, since the disclosure made by the assessee cannot be said to be voluntary and also no reasonable cause could be demonstrated by the assessee the penalty levied u/s 271 (1)(c) is confirmed." 6. During the course of hearing, the ld. AR submitted that the assessee during the relevant previous year deriving income from trading of precious and semi-precious stones. The assessee filed his return of income on 06.01.2012 declaring total income of Rs. 1,58,970/-. The case was selected for scrutiny vide notice dated 27.09.2012 and a query letter was issued on 03.09.2013 for furnishing of basis/general details. The assessee in response to first query letter dated 03.09.2013 filed the requisite details on 27.12.2013 and submitted that during the relevant period due to adverse business conditions the assessee was mentally disturbed and could not disclose the transaction of sale of immovable property in the return of income. The assessee on the same day along with other details filed revised computation of total income incorporating therein capital gain of Rs. 53,25,629/-. The AO after minor adjustments of Rs. 2,362/- accepted the capital gain of Rs. 53,27,991/- as d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails and notice dated 14.11.2013 to show cause for non compliance of notice dated 03.09.2013. The assessee has disclosed the relevant capital gain before any investigation and detection on the part of the AO. The additional income of capital gain voluntarily disclosed during the course of assessment proceedings even after issue of notice u/s 143(3) and general query letter u/s 142(1), cannot be characterized as concealed income and penalty cannot be levied in respect of the same u/s 271(1)(c) of IT Act, 1961. 9. The assessee also relied on the following decisions:- * Hon'ble Delhi High Court in the case of CIT vs. Harnarain, I.T.A. No. 2072 of 2010. * ACIT vs. Ashok Raj Nath (2013) 33 Taxmann.com 588 (Delhi- Trib.) * Qudai International vs. ITO [2009] 13 MTC 622 (Luck Trib) * Sharada Tukaram Bhor vs. ACIT (Mumbai tribunal ) (ITA No. 1871 and 1872 Mum/2014 dated 20.01.2017) 10. Regarding additional ground of appeal, it was submitted that the AO while issuing the notice u/s 274 r.w. section 271(1)(c) of IT Act 1961, has not specified whether the assessee has concealed the particulars of income or furnished inaccurate particulars of such income. Therefore the notice u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty. The practice of the Department sending a printed form 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. 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." "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 for one offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 clauses will lead to an inference as to nonapplication of mind." 13. From the above, it is evident that Hon'ble Karnataka High Court has held that the person who is accused of the offences as stated in Section 271(1)(c) 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(l)(c) do not exist as such he is not liable to pay penalty. The grounds for levy of penalty are thus linked to the adherence to the principles of natural justice and it was held that such principles of natural justice should not be offended. It was further held that the penalty u/s 271(l)(c) can be levied for two specific offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moved any appeal against the assessment order even before the ld CIT(A) and therefore, there is no question of assessment proceedings being subjudice before the Hon'ble High Court. Accordingly, the decision of the Hon'ble High Court in case of Sheveta Construction doesn't support the case of the assessee. 15. It is therefore a case where the satisfaction has been recorded for both the limbs of section 271(1)(c) and finally, the penalty has been levied for violation of both the limbs of section 271(1)(c) of the Act. The initiation of penalty proceedings has happened by recording of satisfaction in the assessment order and the issuance of notice u/s 274 is thus in continuation of recording of such satisfaction and has thus to be read along with the assessment order and not disjoint of the assessment order. It is not a case where the penalty has been initiated for one limb and finally levied in respect of another limb. The AO has been consistent in his approach and his action doesn't reflect any nonapplication of mind. In light of above discussions, we therefore donot feel there is any infirmity in the initiation of penalty proceedings as contended by the ld AR. The additional groun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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