TMI Blog2018 (8) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... Levy of penalty deleted - Decided in favor of assessee. - I.T.A. No. 206/Mum/2011 - - - Dated:- 6-8-2018 - HON BLE SHRI R. C. SHARMA, AM And HON BLE SHRI SANDEEP GOSAIN, JM Appellant by : Shri Vishnu Agrawal Respondent by : Shri Ashish Kumar ORDER Per Sandeep Gosain, Judicial Member The Present Appeal has been filed by the assessee against the order of Commissioner of Income Tax-8, Mumbai for AY 2006-07 on the grounds of appeal mentioned herein below:- 1. On the circumstances and facts of the case, the learned Commissioner of Income-tax (Appeals) has erred in levying a penalty u/s 271(1)(c) of the I.T. Act, 1961 for a sum of ₹ 8,41,500/- without considering the facts that the appellant has voluntarily offered the amount of ₹ 25,00,000/- as additional income during the course of assessment proceeding only. 2. The Appellant craves leave to add, alter, amend or modify any or all grounds till the disposal of the appeal. 2. The brief facts of the case are that the assessee company has filed its return of income for the year under consideration on 30.06.06 declaring a total income of ₹ 20,31,730/-. Thereafter the case was selected f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er book and relevant part is at page 54. It reads as follows: Smt. Kiranmayee, learned counsel, placed reliance on the judgment of the Supreme Court in K.P. MADHUSUDHAN'AN V/s. COMMISSIONER OF INCOME TAX, COCHIN . Therein, ? the Supreme Court held that it is not necessary for the Assessing Officer, while issuing a notice under Section 271(1 )(c)f to expressly invoke Explanation 1(B) appended to the provision. It is however relevant to note that Explanation 1(3) merely adverts to a case of failure of an assessee to substantiate the explanation offered whereby the amount added or disallowed while computing the total income of such person for the purposes of the penalty provision shall be deemed to represent the income in respect of which particulars had been concealed. The Supreme Court observed that the statutory provision included the Explanation and once the assessee was put on notice, no express invocation of the Explanation is necessary. This judgment has no application to the case on hand as what we are concerned with presently is whether the assessee is required to be put on notice as to whether she is to be penalized for concealment of particulars of income or f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or rebutting the proposition that in the absence of recording of satisfaction regarding the exact nature of offence, no penalty under section 271(l)(c) can be imposed. In view of the aforesaid, we delete the penalty imposed. 10. On the other hand learned DR relied on the order of lower authorities and contended that in respect of discrepancy so found in the seized documents, AO has correctly levied penalty u/s.271(1)(c) of the Act. 11. Our attention was invited to notice dated 29/12/2008 issued u/s. 274 r.w.S. 271 (1)(c) wherein AO has not strike of inappropriate words. Our attention was also invited to the quantum order wherein no satisfaction was found to be recorded by the AO as to whether he wants to initiate penalty proceedings for concealment of income or furnishing inaccurate particulars of income. In the quantum order, the AO has just mentioned that penalty proceedings u/s.271(1)(c) of the Act are initiated separately. As per learned AR, there is no allegation as to whether penalty was to be levied for furnishing inaccurate particulars or for concealment of income. Reliance was placed on the decision of Hon ble Bombay High Court in the case of Samson Perinchery and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticulars of income or concealment of income. Thus, the assessing authority was not sure as to whether he had proceeded on the basis that the assessee had either concealed its income or had furnished inaccurate particulars. Thus, the notices so issued are not in compliance with the requirement of the particular section and therefore it is a vague notice, which is attributable to a patent non-application of mind on the part of the assessing authority. 16. There can be no doubt that penalty u/s. 271(1)(c) of the Act is levied for concealing particulars of income or for furnishing inaccurate particulars of such Income, which are the two limbs of this provision. In other words, it is only when the authority invested with the requisite power is satisfied that either of the two events existed in a particular case that proceedings u/s. 271(1)(c) of the Act are initiated. This pre-requisite should invariably be evident from the notice issued u/s. 274 r.w.s. 271 of the Act, which is the jurisdictional notice, for visiting an assessee with the penal provision. The intent and purpose of this notice is to inform the assessee as to the specific charge for which he has been show caused so tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of CIT v. Virgo Marketing P Ltd reported in [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. (p) Notice under section 274 of the Act should specifically state the grounds mentioned in section 271(1)(c) i.e. whether it is for concealment of income or for furnishing of incorrect particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. 10. Thereafter, in so far as the manner in which the statutory notice was required to be issued, the Hon'ble Court concluded thus: (p) Notice u/s 274 of the Act should be specifically state the grounds mentioned in section 271(1)(c), i.e. whether it is for concealment of income or for furnishing of incorrect particulars of income. 20. Finally, in concurring with the findings recorded in the order of the Tribunal, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal is accordingly dismissed. 24. The SLP filed by the department in the aforesaid case also was dismissed by the Hon'ble Supreme Court vide Petition for Special Leave to Appeal (C) No .... ./2016 (CC No. 11485/2016) dated 05.08.2016. 25. The Hon ble jurisdictional High Court in the case of CIT v. Shri Samson Perinchery [Income Tax Appeal No. 1154 of 2014 and others dated 05.01.2017] had also occasion to consider a similar issue. In this case, though proceedings u/s. 271(1)(c) of the Act were initiated for furnishing of inaccurate particulars of income, in the notice issued u/s. 274 r.w.s. 271 of the Act in the standard form, the charge for which it was issued was also not identified, as in the present case. In deleting the levy, so far as non-specification of the default in the jurisdictional notice, the following findings were recorded by the Hon'ble Bombay High Court: 7 Therefore, the issue herein stands concluded in favour of the Respondent-Assessee by the decision of the Karnataka High Court in the case of Manjunath Cotton and Ginning Factory (supra). Nothing has been shown to us in the present facts which would warrant our taking a view different from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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