TMI Blog2018 (4) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT Vs. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] which was cited before the bench but was not considered - Held that:- In the present case such decision was cited before us, however inadvertently same was not considered while deciding the penalty appeal of the assessee. In view of this we are of the opinion that not considering the decision of Hon'ble Karnataka High Court cited before us, renders the order of the tribunal suffering from mistake apparent from record. I Penalty initiated u/s 271(1)(c) - non specification of charge - Held that:- In the present case at the time of framing the assessment order the ld Assessing Officer has recorded a satisfaction that the assessee has furnished inaccurate particulars of income and concealed its income which attracts the provisions of section 271(1)(c) of the Act. while levying the penalty the AO has levied it holding that assessee has furnished inaccurate particulars of income. Therefore, while issuing notice has to come to the conclusion that whether it is a case of ‘concealment of income’ or is it a case of ‘furnishing of inaccurate particulars’. Both the above phrases have different connotatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the penalty has been levied for furnishing inaccurate particulars of income. He therefore, submitted that there is no specific charge by the ld Assessing Officer. However, penalty has been levied on different charge. vii. He further stated that penalty is levied for not substantiating the return of income in the set aside proceedings. However, in the original proceedings the assessee has produced the books of accounts a well as complete stock records. Therefore, the penalty is levied on the non production of the books etc for Assessment Year 1998-99 in assessment again complete in 2007 i.e. almost after 10 years. Therefore, whatever is furnished by the assessee cannot be considered as furnishing of inaccurate particulars. viii. He submitted that the decision of the Hon'ble Supreme Court in case of Cit Vs. SSA s Emerald dated 05.08.2016 was not considered as none of the twin charges in notice u/s 274 were stuck off. 3. He submitted that non-consideration of binding judicial precedents is a mistake apparent from record. He submitted that the decision in case CIT Vs. Manjunatha Cotton and Ginning Factory which was cited before bench, which is also upheld by Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has no option but to make the best judgment by an estimate. An addition made by estimation is as much legal as any other assessment. In the present case, hence, it cannot be said that merely because the estimate of income penalty cannot be levied. The decisions relied upon by the ld AR of the jurisdiction high court in case of 322 ITR 316 does not apply to the facts of the case for the reason that in that particular case the relevant records were seized by the police and therefore, same could not be produced. Here, there is no explanation by the assessee that why the books of accounts are not been produced by the assessee. Hence, reliance placed on that decision does not show any error in the order. 7. The reliance by the assessee in not considering the decision of the Hon'ble Karnataka High Court in case of SSA s Emeralds Meadows also does not help the case of the assessee because the assessee has not produced the relevant copies of the notice during the course of hearing to show that irrelevant potion therein has not been struck off. Hence, on this ground there is no error in the order of coordinate bench. 8. The next ground of error was with respect to the non consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er framed the Assessment order u/s 143(3) read with section 254 of the Act, on 11.12.2006 making an addition of ₹ 71526295/- on account of trading results and also disallowing the expenditure of ₹ 19624092/-. The ld Assessing Officer initiated the penalty proceedings holding as under:- Having regard to the nature of discussion/ disallowance/ additions I am satisfied that the assessee has furnished in accurate particulars of income and concealed its income which attract penalty provisions of Section 271(1)(c) of the IT Act . (underline supplied by us) 11. The ld Assessing Officer vide order dated 30.03.2011 passed order u/s 271(1)(c) of the Act holding that assessee has furnished inaccurate particulars of its income and levied the penalty. The finding of the ld Assessing Officer in the penalty order is as under:- In view of the above, it is clear that the assessee has furnished inaccurate particulars of his income with a view of evade taxes. A penalty of ₹ 25034203/- is therefore, imposed u/s 271(1)(c) of the Act as per following calculation 12. The Hon'ble Karnataka High Court in CIT Vs. Manjunatha Cotton and Ginning Factor 359 ITR 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a legal fiction constitute concealment because of deeming provision. ( g) Even if these conditions do not exist in the assessment order passed, at least, a direction to initiate proceedings under section 271(1)(c) is a sine qua non for the Assessing Officer to initiate the proceedings because of the deeming provision contained in subsection (1B). ( h) The said deeming provisions are not applicable to the orders passed by the Commissioner of Income-tax (Appeals) and the Commissioner. ( i) The imposition of penalty is not automatic. ( j) The 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 the authorities it has resulted in payment of such tax or such tax liability came to be admit ted and if not it would have escaped from tax net and as opined by the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case at the time of framing the assessment order the ld Assessing Officer has recorded a satisfaction that the assessee has furnished inaccurate particulars of income and concealed its income which attracts the provisions of section 271(1)(c) of the Act. while levying the penalty the ld Assessing Officer has levied it holding that assessee has furnished inaccurate particulars of income. Therefore, as per para No. 61 of the order of the decision of the Hon'ble Karnataka High Court the ld AO while issuing notice has to come to the conclusion that whether it is a case of concealment of income or is it a case of furnishing of inaccurate particulars . Both the above phrases have different connotation. It has further been held that the levy of penalty has to be clear for which penalty is levied, the position is unclear then penalty is not sustainable. In the present case the situation is identical when there was no clear charge that whether the penalty is being initiated for furnishing of inaccurate particulars of income or concealment of income but levied penalty on furnishing of inaccurate particulars of income renders the order of the penalty unsustainable. The Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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