TMI Blog2018 (8) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer in the order passed U/s 271(1)(c) holding the assessee guilty of charge of furnishing inaccurate particulars of income and concealment of income is also contrary to the facts of the case. This action of the Assessing Officer bifurcating is based on the premises that the development work on the land and carving out of plots amount to converting the capital asset into stock in trade. Therefore, it is not a case of suppression of particulars or details of income but it is only different of view on the matter before the Assessing Officer. Hence it is not a case of concealment of particulars of income but at the most can be a case of furnishing inaccurate particulars of income. The claim of deduction U/s 80C of the Act regarding the tuition fee and LIC premium is also not a bogus claim and disallowance of same for want of payment receipt can only be considered as furnishing the inaccurate particulars of income but not as concealment of income when the fact regarding the children of assessee studying and the assessee is having LIC policy is not found to be false. Levy of penalty deleted - Decided in favor of assessee. - ITA No. 229/JP/2018 - - - Dated:- 9-8-2018 - SHR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of additions made in the assessment order and further by issuing show cause notice dated 23/3/2015. The Assessing Officer finally levied the penalty of ₹ 99,750/- being 100% of the tax sought to the evaded. 3. The assessee challenged the action of the Assessing Officer before the ld. CIT(A) but could not succeed. 4. Ground No. 1 of the appeal is regarding validity of the order passed U/s 271(1)(c) of the Act. In this regard, the ld AR of the assessee has submitted that the Assessing Officer has not specified the charge and grounds for levy of penalty U/s 271 of the Act either in the satisfaction recorded in the assessment order or in the show cause notice issued U/s 274 read with Section 271(1)(c) of the Act. He has referred the satisfaction recorded by the Assessing Officer in the assessment order and also show cause notice issued by the Assessing Officer and submitted that the Assessing Officer has stated the grounds as the assessee concealed the particulars of income or furnished inaccurate particulars of such income. Thus, the Assessing Officer was not certain about the charge and default on the part of the assessee while initiating the proceedings U/s 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessment order, the Assessing Officer, though, recorded its satisfaction for initiating the penalty proceedings, however, except the term this issue is fit for initiating the penalty proceedings , the Assessing Officer has not mentioned whether it is a case of concealment of particulars of income or furnishing inaccurate particulars of income. Similarly, in the notice dated 23/03/2015 issued U/s 274 of the Act for initiation of penalty proceedings dated 23/3/2015 placed at page 8 of the paper book is also without specifying the charge and default on the part of the assessee. The relevant para of the charge mentioned in the show cause notice is as under: Have concealed the particulars of your income or furnished inaccurate particulars of such income. Thus, the Assessing Officer has neither strike of the irrelevant part nor specified the ground and charge against which the penalty proceedings were initiated against the assessee. Thus, it is clear case of nonspecifying the grounds and charge for which the penalty proceedings were initiated by the Assessing Officer. The Hon ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton Ginning Factory o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 a case of furnishing of inaccurate particulars. The Apex Court in the case of T. Ashok Pai v. CIT [2007] 292 ITR 11/161 Taxman 340 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 CIT v. Manu Engg. [1980] 122 ITR 306 and the Delhi High Court in the case of CIT v. Virgo Marketing (P.) Ltd. [2008] 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 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 non-application of mind. INDEPENDENT PROCEEDING 62. The penalty proceedings are distinct from assessment proceedings, and independent therefrom. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is as under: ( a) Penalty under Section 271(l)(c) is a civil liability. ( b) Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. ( c) Wilful concealment is not an essential ingredient for attracting civil liability. ( d) Existence of conditions stipulated in Section 271(l)(c) is a sine qua non for initiation of penalty proceedings under Section 271. ( e) The existence of such conditions should be discernible from the Assessment Order or order of the Appellate Authority or Revisional Authority. ( f) Even if there is no specific finding regarding the existence of the conditions mentioned in Section 271(l)(c), at least the facts set out in Explanation 1(A) (B) it should be discernible from the said order which would by 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(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 insofar as concealment of income and furnishing of incorrect particulars would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings. There is no dispute that the said decision of Hon ble Karnataka High Court was followed in a subsequent decision in the case of CIT Vs SSA S Emerald Meadows (supra) and the SLP filed by the revenue against the said decision was dismissed by the Hon'ble Supreme Court reported in 242 taxman 180. Further the Hon ble Jurisdictional High Court in the case of Sheveta Construction Co. Pvt. Ltd. in DBIT Appeal No. 534/2008 dated 06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has furnished inaccurate particulars of income and concealed his income, therefore, the charge in the show cause notice is not certain whereas the levy of penalty in the impugned order is for both the limbs which is inconsistent with the charge as mentioned in the show cause notice. The findings of the Assessing Officer in the order passed U/s 271(1)(c) holding the assessee guilty of charge of furnishing inaccurate particulars of income and concealment of income is also contrary to the facts of the case. The penalty in this case was levied against the addition made on account of bifurcation of capital gain into two parts one as Long Term Capital Gain and other as business income. This action of the Assessing Officer bifurcating is based on the premises that the development work on the land and carving out of plots amount to converting the capital asset into stock in trade. Therefore, it is not a case of suppression of particulars or details of income but it is only different of view on the matter before the Assessing Officer. Hence it is not a case of concealment of particulars of income but at the most can be a case of furnishing inaccurate particulars of income. As regards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g from sale of the land in question which is the only transaction of sale and no transaction of purchase. So far as the penalty levied on account of addition made by the Assessing Officer in respect of sale of land in question, the same is otherwise not sustainable on the merits of the case. 7.1 As regards the penalty levied for disallowance of claim U/s 80C of the Act of ₹ 16,000/-, the Assessing Officer has disallowed the same for want of production of evidence. Though, it was not a case of the Assessing Officer that the assessee has made bogus claim but during the assessment proceedings, the assessee being the agriculturists could not produce the evidence on account of payment of tuition fee of ₹ 6,000/- and Life Insurance Premium of ₹ 10,000/-. Accordingly, only because the assessee could not produce the receipt of premium as well as the tuition fee would not lead to the conclusion that the assessee has not paid LIC premium or tuition fee for the children. Accordingly, even if the said disallowance is made for want of requisite receipt, the claim of the assessee cannot be considered as bogus claim. Hence, the penalty levied by the Assessing Officer without ..... X X X X Extracts X X X X X X X X Extracts X X X X
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