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TMI Blog2019 (10) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... otice. Therefore, the initiation and imposing penalty proceedings is wrong, bad in law, invalid and void ab-initio and CIT(A) was not justified in confirming the penalty u/s 271(1)(c ) of the Act. ii) On the facts and in the circumstances of the case and in law, the Assessing Officer has erred in imposing the penalty u/s 271(1)(c) of the Act without specifying the limb for reasons in the penalty notice to impose the penalty i. e. whether it is for concealment of particulars of income or for furnishing of inaccurate particulars of income. Therefore, the initiation and imposing of penalty proceedings is wrong, bad in law, invalid and void ab initio and CIT(A) has not justified in confirming the penalty u/s 271(1)(c) of the Act. iii) On the facts and in the circumstances of the case and in law, the A.O. has erred in imposing penalty u/s 271(1)(c) of the Act of Rs. 7,55,811/- by considering concealed income of Its 29,32,657/- i. e. assessed income less income as per original return of income. Penalty levied is also on disallowances made though penalty proceedings have not been initiated in respect of said disallowance made in the assessment order u/s 143(3) of the Act. Therefore. t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income and receipt of notice u/s 143(2), the assessee had a time of approximately one year but he failed to file a revised return of income. The AO thus held that it was an attempt on the part of the assessee to evade legitimate taxes due to the revenue and clearly it was a case of furnishing of inaccurate of particulars of income leading to concealment. Therefore, the AO levied a penalty of Rs. 7,55,811/- being 100% of the tax sought to be evaded. 4. In appeal, the Ld. CIT(A) agreed with the reasons given by the AO and confirmed the penalty of Rs. 7,55,811/-. 5. Before us, the Ld. counsel for the appellant submits that the AO has erred in imposing the penalty u/s 271(1)(c) of the Act without specifying the limb for reasons in the penalty notice to impose the penalty i. e. whether it is for concealment of particulars of income or for furnishing of inaccurate particulars of income. Therefore, the initiation and imposing of penalty proceedings is wrong, bad in law, invalid and void ab initio and CIT(A) is not justified in confirming the penalty u/s 271(1)(c) of the Act. Further reliance is placed by him on the decision in ITO v. Fashionways (2002) 77 TTJ 59 (Asr), ACIT v. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear from the end of relevant assessment year or before the completion of assessment whichever is earlier. If the law itself has a provision to revise the return before completion of assessment, it cannot be held that the assessee has concealed his income or had filed inaccurate particulars of income just because he revised the return after service of notice u/s. 143(2)." In Mak Data P. Ltd. vs. CIT (Civil Appeal No.9772 of 2013), it is held by the Hon'ble Supreme Court that " the AO has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the AO is not required to record his satisfaction in a particular manner or reduce it into writing". In the case of CIT vs. Smt. Kaushalya and Others (1995) 216 ITR 660 (Bom), the Hon'ble Bombay High Court held: "9. We will first take up the show-cause notice dated March 29, 1972, pertaining to the assessment years 1968-69 and 1969-70. The assessment orders were already made and the reasons for issuing the notice under section 274 read with section 271(1)(c) were recorded by the Income-tax Officer. The assessee fully knew in detail the exact charge of the Department against him. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings u/s 271(1)(c) on the basis of the original return was also initiated. On appeal, the CIT(A) cancelled the penalty. On appeal by the revenue, the Tribunal held that since it was not in dispute that the Department accepted the revised return and no addition was made in figure disclosed in revised return, no penalty could be imposed on the assessee. In the instant case, admittedly the assessee filed its return of income for the impugned assessment year on 30.09.2011 declaring total income of Rs. 9,733/-. Notice u/s 143(2) was issued by the AO on 12.09.2012. The assessee filed its revised return of income on 25.09.2012 declaring income of Rs. 23,92,594/-. Therefore, the instant case is distinguishable from the above decision. In Ghodawat Foods (supra), the assessee filed its return of income for the AY 2004-05 on 01.11.2004 declaring total income of Rs. 94,42,109/-. The AO issued notice u/s 143(2) to the assessee. During the course of scrutiny assessment proceedings the Assessing Officer observed that the assessee has creditors to the tune of Rs. 20,51,06,603/-. The total number of creditors shown by the assessee was 315. The Assessing Officer after detailed enquiry concluded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of expenditure made for paying the interest on the loans incurred by it by which amount the assessee purchased some IPL shares by way of its business policies. However, admittedly, the assessee did not earn any income by way of dividend from those shares. The company in its return claimed disallowance of the amount of expenditure of Rs. 28,77,242/- u/s 14A of the Act. In this context, the Hon'ble Supreme Court held that "a mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee". On the above reasons, the appeal filed by the Revenue was dismissed. In the instant case, there is a total difference in the items of the profit & loss account filed along with the original return of income submitted on 30.09.2011 and the revised return on 25.09.2012. It has resulted in difference in income of Rs. 23,82,861/-(Rs. 23,92,594/- minus Rs. 9,733/-) . Therefore, the instant case is distinguishable from the above decision. In Nalwa Investments Ltd. (supra), the assessee filed its return of income on 25.10.2005 declaring total loss of Rs. 1,01,17,371/-. The return was accompanied b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to section 271(1) provides that if that person fails to offer an explanation or the explanation offered by such person is found to be false or the explanation offered by him is not substantiated and he fails to prove that such explanation is bona fide and that all the facts relating the same and material to the computation of his total income has been disclosed by him, for the purposes of section 271(1)(c), the amount added or disallowed in computing the total income is deemed to represent the concealed income. The penalty spoken of in section 271(1)(c) is neither criminal nor quasi-criminal but a civil liability; albeit a strict liability. Such liability being civil in nature, mens rea is not essential. The present factual matrix is to be tested on the anvil of the aforesaid enunciation law by the Hon'ble Supreme Court in Dharmendra Textiles Processors and Atual Mohan Bindal. Let us examine the profit and loss account for the period under consideration filed along with the original return of income and the revised return of income. Profit and Loss account for the year ended 31.01.2011 filed along with the original return of income Profit & Loss Account for the year ended 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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