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TMI Blog2019 (10) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in upholding the levy of penalty imposed under section 271(1)(c) of the Income Tax Act amounting to Rs. 1,40,144/, Rs. 3,18,749/- & Rs. 1,41,000/- for AYs 2007-08, 2008-09 & 2009-10 respectively. 2. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, there was neither furnishing of any inaccurate particulars of income nor could it be validly held that there was any concealment of income on the facts of the case so as to sustain the levy of penalty. 2.1 That the learned Commissioner of Income Tax (Appeals) has further erred in law and on facts by failing to appreciate that no satisfaction has been recorded so as to entail the levy of penalty and as such, the order passed by learned assessing officer is bad in law and the penalty sustained is liable to be cancelled. 3. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate the basic fact that a sum of Rs. 4,16,350/- represented the deduction U/S 43B on account of following: AY 2007-08 Bonus Payable - Rs. 83,608/- Duties & Taxes - Rs. 17,309/- Entry Tax Payable - Rs. 3,12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue authorities and arguments addressed by the Ld. Authorized Representatives of the parties to the appeal, the sole question arises for determination in this case is:- "As to whether the assessee has concealed particulars of income or has furnished inaccurate particulars of such income during assessment proceedings?" 8. Ld. AR for the assessee contended that the AO in order to initiate the penalty proceedings has failed to specify in the show-cause notice issued u/s 271(1)(c)/274 of the Act if the assessee has concealed the particulars of income or has furnished inaccurate particulars of income and relied upon the decisions of Hon'ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory-359ITR 565, CIT vs. SSA's Emerala Meadows -73 taxmann.com 241 (Kar.) (Revenue's SLP dismissed in 242 taxman 180) and Hon'ble High Court of Delhi in Pr. CIT vs. Sahara India Life Insurance Company Ltd. in ITA 475/2019 order dated 02.08.2019. 9. Ld. DR for the Revenue in order to repel the arguments addressed by the ld. AR for the assessee relied upon the orders passed by the AO and the ld. CIT (A). 10. In order to proceed further, we would like to peruse the notice d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment is reproduced as under:- "59. As the provision stands, the penalty proceedings can be initiated on various ground set out therein. If the order passed by the Authority categorically records a finding regarding the existence of any said grounds mentioned therein and then penalty proceedings is initiated, in the notice to be issued under Section 274, they could conveniently refer to the said order which contains the satisfaction 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 case of relying on deeming provision contained in Explanation 1 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 on him 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 (1)( c) do not exist as such he is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mined with reference to the information, facts and materials in the hands of the authority imposing the penalty at the time the order was passed and further discovery of facts subsequent to the imposition of penalty cannot validate the order of penalty which, when passed, was not sustainable. 61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once 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 T Ashok Poi 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 lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA's Emerald Meadows (2016) 73 Taxman.com 241 (Kar) , the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of2016 by order dated 5th August, 2016." 15. Following the decisions rendered in the cases of CIT vs. Manjunatha Cotton and Ginning Factory, CIT vs. SSA's Emerala Meadows and Pr. CIT vs. Sahara India Life Insurance Company Ltd. (supra), we are of the considered view that when the notice issued by the AO is bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. 16. Even, on merits, it is not in dispute that the assessee has disclosed all the deductions claimed u/s 43B of the Act which leads to the conclusion that there is no concealment, no malafide or false representation as the case may be on the part of the assessee in claiming deductions u/s 43B of the Act and as such, the same cannot be amounted to concealment of particulars of income or furnishing of inaccurate particulars of such incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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