TMI Blog2019 (5) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... PER SHRI JASON P BOAZ, A.M. : This appeal by the assessee is directed against the order of CIT(A)-3, Bangalore, dated 06.04.2018 for Assessment Year 2006-07, upholding the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 (in short the Act ). 2. Briefly stated, the facts relevant for disposal of this appeal are as under: 2.1 The assessee filed the return of income for Assessment Year 2006-07 on 31.10.2006 declaring total income of ₹ 25,73,874/-. The case was taken up for scrutiny and the assessment was concluded under section 143(3) of the Act vide order dated 29.12.2008, wherein the assessee s income was determined at ₹ 60,15,011 and penalty proceedings were simultaneously initiated by issue of notice under section 274 r.w.s. 271 of the Act dated 29.08.2008. The order of assessment was subsequently rectified vide order dated 17.12.2009, whereby the assessee s income was now determined at ₹ 55,20,892/-. 2.2 Subsequent to the passing of assessment order dated 29.12.2008 and initiation of penalty proceedings by issue of notice under section 274 r.w.s. 271 of the Act d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed u/s 271(1)(c) of the Act for Assessment Years 2012-13 following the binding decision of Hon ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Kar). Since the notice u/s 274 r.w.s. 271 of the Act for initiation of penalty u/s 271(1)(c) of the Act dated 29.12.2008 was defective and issued in a mechanical manner, without any application of mind by the AO, the conditions precedent for a passing of valid penalty order u/s 271(1)(c) of the Act were absent. In this regard, the learned AR drew the attention of the Bench to the copy of the impugned notice, issued u/s 274 r.w.s. 271(1)(c) of the Act dated 29.12.2008 for Assessment Year 2006-07 filed by the assessee, to demonstrate that the said notice was defective, in as much as it did not indicate whether it was issued to the assessee for concealment of income or for furnishing of inaccurate particulars of income. In support of the proposition that notice issued u/s 274 r.w.s. 271 of the Act, without specifying the default; i.e., whether the notice is issued for concealment of income or furnishing of inaccurate particulars of income; is invalid and consequential pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfaction of the authority which has passed the order. However, if the existence of the conditions could not be discerned from the said order and if it is a rase of relying on deeming provision contained in Explanation-I or in Explanation- 1(B), then though penalty proceedings are in the nature of civil liability, in fact, it is' penal in nature. in either event, the person who is accused of the conditions mentioned in Section 271 should be made known about the grounds on which they intend imposing penalty oil as the Section 274 makes it clear that assessee has a right to contest such proceedings and should have full opportunity to meet the case of the Department and show that the conditions stipulated in Section 271 (I)(c) c/a not exist as such he is not liable to pay penalty. The practice of the Department sending a printed farm where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law when the consequences of the assessee not rebutting the initial presumption is serious in nature and he had to pay penalty from 100% to 300% of tax liability. As the said provisions have to be held to be standby construed notice issued under Section 274 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pal reported in 292 ITR 11 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 M4NU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO IvL4RKETING reported in 171 Taxman 156, has held that penalty has to be clear as to the limb for which it is levied and the action 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 lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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