TMI Blog2018 (1) TMI 1549X X X X Extracts X X X X X X X X Extracts X X X X ..... e are part of the process of the natural justice and the defect in such notice cannot be overlooked. In view of the aforesaid decision we do not find any infirmity in the arguments advanced by the learned AR before us. Contention of the Ld. DR is that the assessee has participated in the penalty proceedings and hence the error, if any that has occurred would be cured in view of the provisions of sec. 292B/292BB of the Act. Opposing the said contention, reliance was placed on the decision rendered by the Bangalore Bench of the Tribunal in the case of Shri K. Prakash Shetty vs. ACIT [ 2014 (6) TMI 976 - ITAT BANGALORE] wherein it was held that the provisions of sec. 292BB would not come to the rescue of the revenue, when the notice was not in substance and effect in conformity with or according to the intent and purpose of the Act. In our view, the notice issued by the AO was not in substance, and effect in conformity with or according to the intent and purpose of the Act, since the Assessing Officer did not specify the charge for which penalty proceedings were initiated and further there was non-application of mind on the part of the Assessing Officer. - Decided in favour of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the additional income could not have been got disclosed by the assessee. The undisclosed in this case has come out as a result of survey and thereafter filing return by the assessee to show the undisclosed income could not be said to be a voluntary act on the part of the assessee. In a number of decisions, including that of the Hon'ble Supreme Court, reported in 186 ITR 571, it has been held that revised return does not mitigate the default under section 271(1)(c). The assessee was under a statutory obligation to file the return of income within the time limit provided under section 139(1) providing therein the correct particulars of its income. It has failed to include in the return so filed the correct particulars of its income. It is relevant in this context to mention that an assessee who made a bona fide discovery about having made a previous incorrect return was entitled to make a revised return invoking the enabling provisions of the law. Such a course, however, is not open when the previous return was dishonestly made. This fact is clear in this case, because even though the assessee had filed a return on 28/05/2010, he had done nothing to revise the return till after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate the shortage in payment of tax by understatement and non filing of I.T. returns. Q. 15 Based on the various documents found in your business premises have you got anything to disclose before the Income Tax Authority? A. 15 As agreed by me I have committed various errors, omissions and technical mistakes in my accounting for the business run in the name of M/s. Mathew Son Agencies (P) Ltd., my wife's name and in my name during the assessment years 2007-08, 2008-09 and 2009-10. To compensate the shortage in payment of tax by understatement and non filing of I.T. returns. 5. Further it was observed that it is evident from the sworn statement of the assessee dated 19.03.2010 that the actual profits in the business were concealed as the same were not shown in the original return of income. It means it is only after getting confronted with evidences found for concealment of income during the course of survey, the assessee has come out with the disclosure of ₹ 1,01,36,100/-. There is no provision as such under section 153A which provides immunity to the penalty proceedings if the assessee comes out with a concealed income during the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Revenue Office Another (2011) 4 SCC 690(SC) 9. Mathewsons Agencies Pvt. Ltd. vs. ACIT, Kochi (ITA Nos. 93 94/Coch/2016 dt. 05/10/2017) (Cochin Bench). 10. CIT vs. Manjunatha Cotton and Ginning Factory Others (2013) 359 ITR 565 (Kar.) 9. The Ld. DR on the other hand submitted that the assessee was given an opportunity before the authorities and the assessee has participated in the penalty proceedings. Hence, the assessee cannot raise this issue before the Tribunal. He further submitted that the error in the issuance of notice u/s. 274 could be cured in view of the provisions of sec. 292B and sec. 292BB of the Act. He submitted that the penalty order which was decided by the CIT(A) on merit ought to be confirmed. 10. We have heard the rival submissions and perused the material on record. We have given a careful consideration to the rival submissions. The argument of the learned counsel for the Assessee was that the show cause notice u/s. 274 of the Act which is in a printed form and the AO has indicated in the said notice as to whether the penalty is sought to be levied on the assessee for furnishing inaccurate particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de 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 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 the tax liability. As the said provisions have to be held to be strictly construed, notice issued under Section 274 should satisfy the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended if the show cause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee. 60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 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. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. The final conclusion of the Hon'ble Court was as follows:- 63. In the light of what is stated above, what emerges is as under: a) Penalty under Section 271(1)(c) is a civil liability. 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be clear and without any ambiguity. o) If the Assessing Officer has not recorded any satisfaction or has not issued any direction to initiate penalty proceedings, in appeal, if the appellate authority records satisfaction, then the penalty proceedings have to be initiated by the appellate authority and not the Assessing Authority. 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 q) Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law. r) The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. s) Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law. t) The penalty proceedings are distinct from the assessment proceedings. The proceedings for imposition of penalty though emana ..... X X X X Extracts X X X X X X X X Extracts X X X X
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