TMI Blog2018 (10) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... e if he has close relative by way of blood or marriage of Shri Tek Chand Bhardwaj. Entire exercise as to transfer of the amount in question by Milton Keynes Council to the assessee is based upon bald document which has not been supported with any evidence either by the Milton Keynes Council or by the assessee to prove his close relations with Shri Tek Chand Bhardwaj. So, in the given circumstances, we are of the considered view that AO as well as ld. CIT (A) have rightly treated the amount in question as income of the assessee without consideration. Hence, question framed is determined against the assessee Penalty u/s 271(1)(c) - Held that:- additions made against the assessee during quantum proceedings have already been confirmed. It is settled principle of law that the penalty cannot be imposed merely on the ground that additions made in the income of the assessee has been confirmed rather to proceed with imposition of penalty u/s 271(1)(c), the AO has to prove that there was concealment of particulars of income or assessee has furnished inaccurate particulars of such income. Bare perusal of the notice issued to the assessee u/s 271(1)(c) goes to prove that assessee has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribution of assets to the assessee. 5. Without prejudice to the foregoing, he Commissioner (Appeals) erred in ignoring the documents submitted, holding that there is no element of personal intimacy between the assessee and payer and that the money has not been given to the assessee on will or on contemplation of death. 6. Without prejudice to the foregoing, the Commissioner (Appeals) erred in ignoring the fact that 2/3rd of the sum of ₹ 1,13,03,320/- was distributed to other two brothers as per the will of late Shri T.C. Bhardwaj and continued to make an addition of the entire ₹ 1,13,03,320/- in the income of the assessee. 7. That on the facts and circumstances of the case and in law, the Assessing officer erred in initiating the penalty proceedings u/s 271 (1)(c) of the Income Tax Act, 1961. 3. The appellant, Shri Satyendra Nath Kukreja (hereinafter referred to as the assessee ) by filing the present appeal (ITA No.2973/Del/2015), sought to set aside the impugned order dated 26.02.2015 passed by Ld. CIT (Appeals)-18, New Delhi affirming the penalty order dated 26.09.2013 passed u/s 271(1)(c) of the Income-tax Act, 1961 (for short the Act ), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 7. Undisputedly, the amount of ₹ 1,13,03,320/- (GBP 158000) was credited in the assessee s account on 15.12.2008 pursuant to the cheque dated 13.11.2008 issued by Milton Keynes Council and another cheque of GBP 640 was also sent by Milton Keynes Council to the assessee on behalf of one Shri Tek Chand Bhardwaj. It is also not in dispute that Shri Tek Chand Bhardwaj who was Person of Indian Origin (PIO) as a citizen of UK, expired on 11.10.2008 at the age of 87 years. 8. In the backdrop of the aforesaid undisputed facts, arguments addressed by the ld. Authorized Representatives of the parties to the appeal, documents relied upon and orders passed by the lower Revenue Authorities, the sole question arises for determination in this case is :- as to whether AO/CIT (A) have erred in treating the amount of ₹ 1,13,03,320/- (GBP 158000) received vide cheque dated 13.11.2008 on the basis of some nomination letter allegedly filed by Tek Chand Bhardwaj with Manager, Halifon Plc., Milton Keynes, U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter otherwise required to be executed in prescribed proforma in all probability and apparently appears to be a colouring device to extract the undue benefit in collusion with Milton Keynes Council. 13. Assessee has also not produced any correspondence by way of text messages or letters between him and Shri Tek Chand Bhardwaj to prove his childhood friendship rather based his entire case on alleged nomination letter. Ld. CIT (A) has rightly observed that Milton Keynes Council has recorded in the letter issued to the assessee that they being next kin of Shri Tek Chand Bhardwaj have been nominated to receive his movable assets and to prove the fact that the assessee s next kin has not brought on record any evidence if he has close relative by way of blood or marriage of Shri Tek Chand Bhardwaj. Entire exercise as to transfer of the amount in question by Milton Keynes Council to the assessee is based upon bald document which has not been supported with any evidence either by the Milton Keynes Council or by the assessee to prove his close relations with Shri Tek Chand Bhardwaj. So, in the given circumstances, we are of the considered view that AO as well as ld. CIT (A) have right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articulars of such income and relied upon the decision rendered by the Hon ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory Ors. 359 ITR 565 (Karn) ; that even at the time of passing the assessment order, the AO has failed to specify himself if the assessee has concealed the particulars of income or had furnished inaccurate particulars of income rather barely stated that penalty proceedings u/s 271(1)(c) of the Act is initiated separately ; that even at the time of levying the penalty, the AO was not categoric enough if he is levying the penalty for concealment of particulars of income or for furnishing of inaccurate particulars of such income. 19. However, ld. DR for the Revenue to repel the arguments addressed by the ld. AR for the assessee company contended inter alia that the notice issued by the AO u/s 274 of the Act is not standalone document which is based on assessment order; that the notice has been issued in respect of furnishing inaccurate particulars of income and relied upon the case of Trimurti Engineering Works 25 taxmann.com 363 . 20. To proceed further, we would like to reproduce notice issued u/s 271(1)(c) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. c) Willful concealment is not an essential ingredient for attracting civil liability. d) Existence of conditions stipulated in Section 271(1)(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) Ever if there is no specific finding regarding the existence of the conditions mentioned in Section 271(1)(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 deeming provisions are not applicable to the orders passed by the Commissioner of Appeals and the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in so far 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. 23. So, following the law laid down by Hon ble High Court affirmed by Hon ble Supreme Court, we are of the considered view that when the assessee has not been specifically made aware of the charges leveled against him as to whether there is a concealment of income or furnishing of inaccurate particulars of income on his part, the penalty u/s 271(1)(c) of the Act is not sustainable. The case law relied upon by the ld. DR are not applicable to the facts and circumstances of this case in the face of the decisions rendered by the Hon ble High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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