TMI Blog2020 (8) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the facts of the present case. Therefore, the assessee has no case on the merits of levy of penalty u/s 271(1)(c) of the IT Act. Satisfaction recorded in the assessment order does not require any specific charge but the statement of the AO that penalty proceedings u/s 271(1)(c) of the Act are separately initiated is sufficient. Therefore, the satisfaction recorded by the AO in the assessment order shall have no legal implementation as regard the charge for which the penalty is initiated and finally levied. The notice issued by the AO U/s 274 of the Act though states that the penalty proceedings U/s 271(1)(c) of the Act are initiated for furnishing inaccurate particulars of income or concealment of particulars of income. Even if the AO was not certain about the charge at the time of initiation of the penalty proceedings but he has given a definite conclusive finding regarding the default or charge at the time of passing the penalty order then no default cannot be found in the penalty order. When the AO has given a certain and definite finding at the time of passing the penalty order then there is no illegality in the penalty order passed U/s 271(1)(c) - Appeal of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges-levy of penalty not justified as furnishing of inaccurate particulars of income and concealment of particulars of income are two separate defaults and Assessing Officer at no stage specified under which limb penalty proceeding initiated- Aditya Chemicals Ltd. vs. Income Tax Officer (2018) 62 ITR 150 (Trib.,Delhi). 6. In this case the decision of honourable Supreme Court CIT vs. Reliance Petroproducts Ltd. reported at 322 ITR 158 is also applicable and other cases are also applicable. 7. The CIT(A)has not considered the facts of the case. The AO has mentioned the Short disclosed Purchases . It is mentioned here that the purchases are made from the turnover of the assessee and these are reflected in the transactions with the RSBCL. It is bonafide also. 4. The assessee is engaged in the business of retail trading of liquor under the licence of Excise Department in the State of Rajasthan. During the course of assessment proceedings, the AO noted that as per the details shown in 26AS purchases for the year under consideration from the various State Government suppliers and district excise office is ₹ 2,07,40,326.37 on which tax collected at source of ₹ 2,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mariner, he cannot be uncertain in the penalty order as to concealment or furnishing of inaccurate particulars of income by using slash between the two expressions. If the addition made by The A.O. but he has not disputed in the same in the Appeal such acceptance of addition does not mean concealment of income. It is held by The Honourable Supreme Court in case of Sir Shadilal Sugar Mills (168 ITR 705) --- Indeed there may be numerous reasons with the tax payer for not approaching the first appellate authority for justice. Karnataka High Court in case of CIT vs. Manunathna Cotton Ginning ITA No. 1307/Bang/2003/ [2013-ITR-HC-KAR-093] has held that even if the assessee has not challenged the order of assessment levying tax and interest and has paid the same, that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty. There is decision of Honourable Supreme Court in CIT vs. Reliance Petroproducts Pvt. Ltd. 322 ITR 158 (SC). Kolkata ITAT Bench in the case of M/S. New Life Sonoscan Centre, vs ItO, Ward - 24(2)1TA No.2560/ KOL/ 2017 held that the show cause notice issued in the present case u/s 274 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act that the penalty is levied for concealment of income. She has relied upon the orders of the authorities below. 6. We have considered the rival submissions as well as relevant material on record. The assessee has not disputed the discrepancy found regarding the suppression of the purchases recorded in the books of account. During the assessment proceedings, the AO has clearly recorded the facts regarding the purchase made by the assessee as reflected in form 26AS as under:- Sr. No. Name Amount TCS 1. Dist. Excise Officer, Amer. 6479130.00 65200.00 2. Raj State Ganganager Sugar Mills 4063199.00 40660.00 3. Raj State Baverage Corp. Ltd. 10171997.37 109416.85 Total 20714326.37 215276.85 These facts as found by the AO in form 26AS were not disputed by the assessee during the assessment proceedings and consequently the AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntentionally concealed his income of ₹ 6,05,536/-. Therefore looking to the facts of the case, I am satisfied that it is fit case of levy of penalty u/s 271(1)(c) of the IT Act. Hence, I impose penalty u/s 271(1)(c) of the IT Act, 1961. Therefore, even if the AO has not mentioned a specific/definite charge for initiation of penalty U/s 271(1)(c) of the Act at the time of issuing notice U/s 274 of the Act if the AO has given a definite finding at the time of levy of penalty then initiation of the penalty proceedings cannot be held as invalid. The assessee has relied upon the Third Member decision of the Amritsar Benches in case of HPCL Mittal Energy Ltd. vs. ACIT 97 Taxmann.com 3 wherein the Tribunal has held in para 11 to 21 are as under:- 11. It transpires from the above discussion that, insofar as the issue before me is concerned, there are broadly two different stages having bearing on the imposition of penalty, namely, assessment and penalty. At the assessment stage, the AO has to record a satisfaction in the assessment order as to whether the additions/disallowances, on which penalty is likely to be imposed, represent concealment of particulars of income or fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome or furnishing of inaccurate particulars of income. Deeming 'satisfaction' under clause (c) in terms of sub-section (1B) means deeming 'proper satisfaction' and 'proper satisfaction' means getting satisfied as to whether it is a case of concealment of particulars of income or furnishing of inaccurate particulars of such income. It cannot be conceived that a direction to initiate penalty proceedings in the assessment order is only 'satisfaction' and not 'proper satisfaction'. This contention, if taken to a logical conclusion, would mean that after such a direction in the assessment order constituting his satisfaction, the AO should once again specifically record satisfaction with reference to each addition or disallowance as to whether it is a case of concealment or furnishing of inaccurate particulars. It is obviously an absurd proposition and goes against the unambiguous language of the provision. Thus, it is overt that after insertion of sub-section (1B) to section 271, invariably, the AO should be deemed to have recorded proper satisfaction with reference to each addition/disallowance as to concealment or furnishing of inaccurate partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncertain in the penalty order as to concealment or furnishing of inaccurate particulars of income by using slash between the two expressions. When the AO is satisfied that it is a clear-cut case of 'furnishing of inaccurate particulars of income', he must again specify it so in the notice at the time of initiation of penalty proceedings and also in the penalty order. After initiating penalty on the charge of 'furnishing of inaccurate particulars of income', he cannot impose penalty by finding the assessee guilty of 'concealment of particulars of income'. Again, he cannot be uncertain in the penalty order as to concealment or furnishing of inaccurate particulars of income by using slash between the two expressions. When the AO is satisfied that it is a clear-cut case of imposition of penalty u/s. 271(l)(c) of the Act on two or more additions/disallowances, one or more falling under the expression 'concealment of particulars of income' and the other under the 'furnishing of inaccurate particulars of income', he must specify it so by using the word 'and' between the two expressions in the notice at the time of initiation of penalty proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. In Padma Ram Bharali (supra), the Hon'ble High Court did not sustain penalty levied u/s. 271(l)(c) when: 'the initiation of the penalty proceeding was for concealment of the particulars of income. But the Tribunal finally held that the assessee would be deemed to have concealed the particulars of income or to have furnished inaccurate particulars of such income.' 19. Thus it is evident that when the AO is satisfied at the stage of initiation of penalty proceedings of a clear-cut charge against the assessee in any of the three situations discussed above (say, concealment of particulars of income), but imposes penalty by holding the assessee as guilty of the other charge (say, furnishing of inaccurate particulars of income) or an uncertain charge (concealment of particulars of income/furnishing of inaccurate particulars of income), the penalty cannot be sustained. 20. Another crucial factor to be kept in mind is that the satisfaction of the AO as to a clear-cut charge leveled by him in the penalty notice or the penalty order must concur with the actual default. If the clear-cut charge in the penalty notice or the penalty order is that of 'concealmen ..... 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