TMI Blog2018 (1) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of assessee - ITA No. 801/JP/2016 - - - Dated:- 25-1-2018 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER For The Assessee : Shri Rajeev Sagoni And Shri Rohan Sagoni (C. A.) For The Revenue : Shri R.A. Verma (Addl.CIT) ORDER PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 21.06.2016 of CIT(A), Jaipur arising from the penalty order passed u/s 271(1)(c) of the I. T. Act for the assessment year 2011-12. The Assessee has raised the following ground:- 1. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in imposing penalty of ₹ 4,95,018/- u/s 271(1)(c) of the Income Tax Act, 1961. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the penalty of ₹ 4,95,018/- imposed u/s 271(1)(c). 2. The assessee Firm craves its right to add, amend or alter any of the grounds on or before the hearing. 2. The assessee has also raised the additional ground:- In the facts and circumstances of the case and in law the ld. AO has erred in imposing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ITO in ITA No. 534/2008 as well as decision of Hon ble Supreme Court in case of CIT vs. SSA s Emerald Meadows 73 taxmann.com 241 . Hence, ld. AR has pleaded that the impugned notice issued u/s 274 of the Act is not valid and liable to be quashed consequently the penalty of levy by the AO is also liable to be quashed. 5. On the other hand, ld. DR has submitted that the penalty proceeding u/s 271(1)(c) of the Act were initiated by the AO as per the assessment order on concealment of the income which was surrendered by the assessee during the assessment proceeding. He has referred to the assessment order passed u/s 143(3) of the Act and submitted that the assessee has not disclosed the sale to the extent of ₹ 16,02,000/- made during the year under consideration and when this fact was pointed out by the AO after getting the AIR information then, the assessee surrendered the said amount to tax. Hence, it is a case of concealment of income and the assessee itself has offered the income to tax when the AO discovered the income not offered to tax. He has relied upon the explanation 1B of section 271(1)(c) as well as decision of Coordinate Bench of this Tribunal dated 29.09.2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh stated in the assessment order that the penalty proceeding have been initiated separately however, the grounds on which the penalty proceeding have been initiated are required to be stated in the show cause notice issued u/s 274 r.w.s. 271(1)(c) of the Income Tax Act. I find that the Assessing Officer has neither specified a particular ground or default of the assessee nor deleted the irrelevant ground or default of the assessee as mentioned in the show cause notice issued u/s 274 dated 30.08.2013. The relevant para of the notice is reproduced as under:- have concealed the particulars of your income or --------- furnished inaccurate particulars of such income. Though the assessee has surrendered this amount to tax however, it is an addition made to the income as declared by the assessee in the return of income and therefore, it is not the case where the AO has not made an addition but the case of the assessee falls in the category of addition to the total income has been made by the AO though based on the surrendered made by the assessee. 7. As regards the decision of Coordinate Bench of this Tribunal in case of M/s Airen Metals Pvt. Ltd. vs. ACIT (supra), I fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % 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 in law. It is needless to point out satisfaction of the existence of the grounds mentioned in Section 271(l)(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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. INDEPENDENT PROCEEDING 62. The penalty proceedings are distinct from assessment proceedings, and independent therefrom. The assessment proceedings are taxing proceedings. The proceedings for imposition of penalty though emanating from proceedings of assessment are independent and separate aspects of the proceeding. Separate provision is made for the imposition of penalty and separate notices of demand are made for recovery of tax and amount 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 the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditions do not exist in the assessment order passed, at least, a direction 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 assessment 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. ( l) Only when no explanation is offered or the explanation offered is found to be false ..... X X X X Extracts X X X X X X X X Extracts X X X X
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