TMI Blog2018 (7) TMI 1164X X X X Extracts X X X X X X X X Extracts X X X X ..... are directed against the separate orders each dated 24.06.2016 of the ld. CIT(A)-3, Gurgaon for the assessment years 2006-07 and 2007-08. 2. Since, the issues involved are common in these appeals which were heard together, so, these are being disposed off by this common order for the sake of convenience and brevity. 3. The common grounds raised in these appeals read read as under: 1. That the Learned Assessing Officer as well as Learned CIT(Appeal)-3, Gurgaon has failed to appreciate the facts of the case and has erred while imposing the penalty u/s 271(1)(c) of the Income Tax Act, 1961, inspite of the fact that there is no variation in the returned income (revised) viz a viz assessed income. 2. That the entire penalty order is arbitrary, illegal, unjust against the facts as well as against the law. 2. That the appellant prays to allow to admit the additional grounds of appeal at the time of hearing. 4. Facts of the case for the assessment year 2006-07 in brief are that the assessee filed the return of income on 24.11.2006 declaring total income of ₹ 3,66,88,330/-. However, the assessment was completed u/s 143(3) of the Income Tax Act, 1961 (he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,79,58,650/- as against the declared income of ₹ 3,78,16,430/- (revised return). Here the above statement of the assessee is totally wrong because the original return in response to notice u/s 153A of the Act, was declared at ₹ 3,67,66,430/- and not ₹ 3,78,16,430/-. The revised return of income of ₹ 3,78,16,430/- was filed only when the assessee was cornered while confronting the document annexure 'A-3' during the course of assessment proceedings. ii) In its above reply assessee submitted that the company has made a declaration of ₹ 70 Lacs on account of unaccounted business expenditure in the course of search operation u/s 132(4) of the I.T. Act, 1961. In this regard, it is pertinent to mention here that the said disclosure was made by the assessee in the financial year 2008-09 relevant to the A.Y.2009-10 not for the year under reference. iii) If the disclosure was made of ₹ 70 Lacs on account of unaccounted business expenditure then why he has not declared the same in the returns of the relevant assessment years. iv) In the reply the assessee submitted that the amount of ₹ 11,92,220/-was ascertained only after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact. Admittedly the assessee concealed the transactions in the bank account and when the notice of reassessment was issued, finding no way out, the assessee surrendered income, to avoid penal consequences. In such a situation, it could not be held that the assessee worked to buy peace of mind and there was no evidence of concealment which called for penalty. This is not a case where the penalty has been imposed because the assessee disclosed higher income voluntarily but a case of clear concealment when the assessee having no other way out was forced to surrender the undisclosed income. The plea of the appellant that the income was surrendered to buy peace of mind, penalty should not be levied is also untenable in view of the judgment of the Hon'ble Supreme Court in the case of Mac data Private Limited vs. CIT (2013) 358 ITR 593 (SC), whereby it has been held that the voluntary disclosure/surrender made in view of detection by the Assessing Officer in the search conducted does not relieve the assessee from the mischief of the penalty proceedings. In view of the discussion above, and the judicial pronouncements relied upon which is applicable to the case of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articulars of income therefore, penalty proceedings u/s 271(1)(c) r.w. explanation 5-A of the I.T. Act, 1961 are initiated separately for the above default of the assessee. ( Addition of ₹ 11,90,220/-) 10. It is also noticed that the AO levied the penalty u/s 271(1)(c) of the Act on the different charge i.e. concealment of particulars of taxable income which is evident from the order dated 29.06.2011 passed u/s 271(1)(c) of the Act, the relevant portion read as under: From the above facts of the case, it has been established that the assessee has deliberately concealed the particulars of its taxable income. I am therefore satisfied that the assessee is liable for penalty u/s 271(1)(c) @ 100% of tax sought to be evaded. I therefore, impose a penalty of ₹ 4,01,300/-. 11. From the above facts, it is crystal clear that the AO initiated the penalty proceedings u/s 271(1)(c) of the Act for furnishing of inaccurate particulars of income while the penalty was levied u/s 271(1)(c) of the Act on account of concealment of taxable income. 12. It is also noticed that the AO in the notice u/s 274 of the Act has not mentioned the specific charge on which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory 359 ITR 565 to delete the penalty: The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus, the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it as case of furnishing of inaccurate particulars. The apex court in the case of Ashok Pai reported in [2007] 292 ITR 11 (SC) 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 P. Ltd., 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ineering Pvt. Ltd. Vs ITO, Ward-7(3), New Delhi in ITA No. 5988/Del/2016 for the assessment year 2006-07 vide order dated 27.10.2017 (supra) wherein the relevant findings have been given in paras 8 to 10 which read as under: 8. We have carefully gone through the contentions of either side and perused the material papers on record. Order dated 29.12.2008 passed u/s 143(3) of the Act reads that since the assessee company has concealed particulars of income, penalty proceedings u/s 271(1)(c) of the Act are being initiated. Further the penalty order dated 26.04.2013 vide para 3.2 says that the AO is satisfied with the assessee company had furnished inaccurate particulars of its income to the extent of ₹ 2,40,00,000/- and ₹ 96,98,457/-, provisions u/s 271(1)(c) of the Act are clearly attracted and, therefore, penalty of ₹ 81,68,920/- was levied. Impugned notice u/s 274 r.w. sec 271 of the Act is a printed form wherein the relevant portion relating to the limb of charge is as follows: .. * have concealed the particulars of your income or furnished inaccurate particulars of such income in terms of explanation 1, 2, 3, 4 and 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time the order was passed and further discovery of facts subsequent to the imposition of penalty cannot validate the order of penalty which, when passed, was not sustainable. 10. The Hon ble Karnataka High Court in CIT vs SSA s Emerald Meadows, [2016] 73 taxmann.com 241 (Karnataka) has followed the Division Bench judgment in the case of CIT vs Manjunatha Cotton Ginning Factory, 359 ITR 565 (Kar). Hon ble Supreme Court in SSA s Emerald Meadows (supra) dismissed the SLA preferred against the decision of the Hon ble Karnataka High Court in the case of CIT vs SSA s Emerald Meadows, [2016] 73 taxmann.com 241 (Karnataka). The principle laid down by these decisions is clear that 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 and the notice issued u/s 274 r.w.s. 271(1)(c) of the Act shall specify under which limb of Sec. 271(1)(c) of the Act the penalty proceedings were initiated, and in the absence of such clarity, the proceedings are bad in law. We, therefore, while respectfully following the judgements referred to above, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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