TMI Blog2021 (6) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... ore levying penalty. The failure to do the same would render the penalty null and void in the eyes of law. No doubt, the discrepancies were found during the survey. This has yielded income from the assessee in the form of amount surrendered by the assessee. Presently, we are not concerned with the assessment of income, but the moot question is to whether this would attract penalty upon the assessee under the provisions of section 271(1)(c) - Obviously, no penalty can be imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. Since the assessee was exposed during survey, may be, it would have not disclosed the income but for the said survey. However, there cannot be any penalty only on surmises, conjectures and possibilities. Section 271(1)(c) of the Act has to be construed strictly. Unless it is found that there is actually a concealment or nondisclosure of the particulars of income, penalty cannot be imposed. There is no such concealment or non-disclosure as the assessee had made a complete disclosure in the income-tax return and offered the surrendered amount for the purposes of tax. In view of the fact that returned income h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic, we are inclined to condone this delay and admit the appeal. 3.1 The facts leading to imposition of penalty are that an assessment was framed against the assessee for the year u/s 143(3) on 31/03/2015 which accepted the returned income of ₹ 202.59 Lacs filed by the assessee on 28/09/2013 u/s 139(1). 3.2 During assessment proceedings, it transpired that a requisition was made u/s 132A in respect of cash of ₹ 175 Lacs seized from one Mr. Louis Basil Rodrigues (an employee of Ryan International School, Vasant Kunj, New Delhi) on 02/03/2013 while he was travelling in a car from Delhi to Ludhiana. Mr. Louis Basil Rodrigues could not explain the source and the purpose of carrying cash satisfactorily and accordingly, the cash was seized u/s 132A of the Income Tax Act, 1961. In his statement to DDIT(lnv.), Patiala, he stated that cash belonged to St. Xavier Education Trust, Vasant Kunj, New Delhi and the same was being carried for school purposes. The cash was stated to be handed over to him by Mr. Novert Fernandes, an accountant of St. Xavier Education Trust, New Delhi. Consequently, a survey action u/s 133A was carried out at Ryan International School, Vasant Kunj, N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me as well as furnished inaccurate particulars of its income at the time filing of return of income u/s 139(1) of the Income Tax Act, 1961, This being so, I am satisfied that this is a fit case for imposition of penalty u/s 271(1)(c) on account of cash seized of ₹ 1,75,00,000/- as the same conceded by the assessee. The penalty u/s 271(1)(C) are worked out at ₹ 52,32,400/- being 100% and ₹ 1,56,97,200/- being 300% of tax sought to be evaded. However, I levy penalty of ₹ 1,04,64,800/- being 200% of the amount of tax sought to be evaded by reason of concealment of taxable income as well as furnishing of inaccurate particulars of such income. 5. Aggrieved, the assessee assailed the imposition of penalty before Ld. CIT(A) with partial success vide impugned order dated 17/02/2020. The Ld. CIT(A) while confirming the imposition of penalty, reduced the same to 100% of tax sought to be evaded. In other words, the penalty of ₹ 104.64 Lacs as imposed by Ld.AO was reduced to ₹ 52.32 Lacs. The aforesaid adjudication has given rise to cross-appeals before us. 6. The Ld. AR assailed penalty on legal grounds by placing reliance on the recent decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chronology of the events would show that Ld. AO has failed to frame as well as specify the exact charge for which penalty was being levied against the assessee. Both the stated limbs i.e. concealment of income furnishing inaccurate particulars of income, as per settled legal position, carry different connotations and operate differently. It was obligatory on the part of Ld. AO to frame specific charge against the assessee before levying penalty. The failure to do the same would render the penalty null and void in the eyes of law. As rightly pointed out by Ld. AR, the issue of framing of specific charge in the notice has been dealt with at length by larger bench of Hon'ble Bombay High Court in the recent decision titled as Mohd. Farhan A.Shaikh V/s DCIT (125 taxmann.com 253) wherein the Hon'ble Court has answered the issue of reference as follows: - Answers: Question No. 1: If the assessment order clearly records satisfaction for imposing penalty on one or the other, or both grounds mentioned in Section 271(1)(c), does a mere defect in the notice-not striking off the irrelevant matter-vitiate the penalty proceedings? 181. It does. The primary burden lies on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can exist a case where vagueness and ambiguity in the notice can demonstrate non-application of mind by the authority and/or ultimate prejudice to the right of opportunity of hearing contemplated under section 274. So asserts Kaushalya. In fact, for one assessment year, it set aside the penalty proceedings on the grounds of non-application of mind and prejudice. 186. That said, regarding the other assessment year, it reasons that the assessment order, containing the reasons or justification, avoids prejudice to the assessee. That is where, we reckon, the reasoning suffers. Kaushalya's insistence that the previous proceedings supply justification and cure the defect in penalty proceedings has not met our acceptance. Question No. 3: What is the effect of the Supreme Court's decision in Dilip N. Shroff on the issue of non-application of mind when the irrelevant portions of the printed notices are not struck off ? 187 In Dilip N. Shroff, for the Supreme Court, it is of some significance that in the standard Pro-forma used by the assessing officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proves of the practice, to be particular, of issuing notices in printed form without deleting or striking off the inapplicable parts of that generic notice. Since there is failure on the part of Ld.AO to frame specific charge against the assessee, the penalty would not be sustainable in the eyes of law as held by Hon'ble Jurisdictional High Court in the above decision after considering catena of judicial pronouncements on the issue. 9. Another aspect of the matter is that returned income filed by the assessee has ultimately been accepted by the revenue. The concealment of income or furnishing of inaccurate particulars of income has to be in the return of income filed by the assessee as held by Hon'ble Delhi High Court in CIT V/s SAS Pharmaceuticals (335 ITR 259). The relevant observations were as follows: - 15. It necessarily follows that concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the income-tax return filed by it. There is sufficient indication of this in the judgment of this Court in the case of CIT v. Mohan Das Hassa Nand [1983] 141 ITR 203 / 13 Taxman 328 and in Reliance Petroproducts (P. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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