TMI Blog2021 (8) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... he notice was served upon the assessee, we are of the view that, if at all, the A.O. was of the view that the assessee has concealed the income or furnishing inaccurate particulars of income then in that eventuality, he should have deleted or not mentioned the other limb for imposition of penalty. This act of the A.O. clearly indicates that the entire exercise of initiation of penalty proceedings has been done in a casual and cavalier manner. The notice u/s 271 should be specific for imposition of penalty u/s 271 (1) (c) of Act i.e. for concealment of particulars of income or furnishing inaccurate particulars of income as has been held in the case of CIT Vs. M/s SSA's EMERALD MEADOWS [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] . We are of the view that concealment of income or furnishing of inaccurate particulars of income are two different forms and they cannot be inter mixed, therefore, we quash the penalty proceedings initiated U/s 271(1)(c). Trading addition - Bogus purchases - HELD THAT:- It is a settled law that additions based on estimation where higher trading profit as declared against the gross profit has been declared therein, in that cases, no penalty is le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of ld. CIT(A)-1, Jaipur dated 02/09/2019 for the A.Y. 2008-09, wherein following grounds have been taken. 1. That on the facts and in the circumstances of the case, the ld. CIT(A) is wrong, unjust and has erred in law in not accepting plea of the appellant that the notice issued by the assessing officer u/s 271(1)(c) of the I.T. Act, 1961 is wrong and bad in law inasmuch as it did not specify in which limb of Sec. 271(1)(c) of the Income Tax Act, 1961 the penalty proceedings has been initiated i.e. whether for concealment of income or furnishing of inaccurate particulars of income. 2. That without prejudice to the ground No. (1) above on the facts and in the circumstances of the case the ld. CIT(A) is wrong, unjust and has erred in law in confirming penalty of ₹ 1065919 imposed by the ld. Assessing Officer under section 271(1)(c) of the I.T. Act, 1961. 3. That the appellant craves the permission to add to or amend to any of the above grounds of appeal or to withdraw any of them. 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. Brief facts of the case are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and also relied on the written submissions filed before the Bench and the contents of the same are reproduced below: 1(a) Submission of the assessee- 1. Initiation of Penalty a) In Assessment Order:- In the assessment order the initiation of penalty is stating -that assessee has concealed the particulars of income and furnished inaccurate particulars of income by introducing non-genuine purchases it is a fit case for initiating penalty proceedings ' u/s 271 (1) (c) of the I. T. Act. 1961 which is being done separately and b) Notice u/s 274 Further in the penalty notice u/s 274 read with section 271 of the I. Tax Act dated 30.09.2015 (copy enclosed). A.O. mentioned that: - Concealed the particulars of income or furnished inaccurate particulars of such income. c) Notice dated 09.01.2018 Further in the penalty notice u/s 274 read with section 271 (1) (c) of I. Tax Act dated 09.01.2018 (copy enclosed). A.O. mentioned that: - Penalty proceedings u/s 271 (1) (c) were initiated against you during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le in this case quantum of which is worked out as under. Thus the penalty proceedings were initiated without specifying the limb i.e. whether the penalty was initiated for concealment of particulars of income or for furnishing inaccurate particulars of income. Thereafter the penalty was levied by holding that the assessee has furnished inaccurate particulars of income. Therefore the initiation and imposing of penalty proceedings is wrong, bad in law, invalid and void ab initio. 3. The notice u/s 271 should be specific on imposing of penalty u/s 271 (1) (c) of Income Tax Act, 1961 i.e. concealed particulars of income or furnishing inaccurate particulars of income. Reliance is placed on the decision of Hon'ble Karnataka High Court in the case of CIT Vs. M/s SSA's EMERALD MEADOWS reported in 2015 (11) TMI 1620. He also relied on the decision in the case of Manjunatha Cotton Ginning Factory [20131 359 ITR 565 (Karnataka) and Jyoti Ltd. [20131 taxmann.com 65 (High Court-Guj), New Sorathia Engg. Co. [2006] 282 ITR 642 (Guj-High Court). 4. The above ratio laid down in the case of Manjunatha Cotton Ginning Factory Supra) has been followed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear-cut charge against assessee of concealment of particulars of income, but imposes penalty by holding assessee as guilty of other charge (furnishing of inaccurate particulars of income) or an uncertain charge (concealment of particulars of income/furnishing of inaccurate particulars of income), penalty cannot be sustained 8. Further the Hon'ble Supreme Court of India in case of PCIT (Central) Vs Golden Peace Hotels Resorts Pvt. Ltd. (2021) 124 Taxmann.Com 249 (SC) held that SLP dismissed against High Court ruling that recording of satisfaction by Assessing Officer that there was concealment of income or that any inaccurate particulars were furnished by assessee was sine qua non for initiation of penalty proceedings and in absence of such satisfaction, both Commissioner (Appeals) as well as Tribunal had correctly ordered to drop penalty proceedings against assessee 6. On the other hand, the ld Sr.DR has vehemently supported the orders of the authorities below. 7. We have considered the rival contentions and carefully perused the material available on record. From perusal of record, we noticed that the penalty in this case was initiated by the A.O. on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that: - 3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under section 274 read with Section 271 (1) (c) of the Income Tax Act, 1961 (for short 'the Act) to be bad in law as it did not specify which limb of Section 271 (1) (c) of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX - VS - MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. In our view, since the matter is covered by judgement of the Division Bench of this Court, we are of the opinion, no substantial question of law arise in this appeal for determination by this Court. The appeal is accordingly dismissed. The department has filed SLP in Hon'ble Supreme Court which has been dismissed. Therefore, Hon'ble Supreme Court has approved the findings made by Hon'ble Karnataka High Court in the case of CIT Vs. SSA's Emerald Meadows and CIT Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aipur in ITA No. 1033/JP/2016 has cancelled the penalty by holding that: - 3.2 We have heard the rival contention, perused the material available on record and gone through the orders of the authorities below. For the sake of clarity the relevant contents of the Assessment order are reproduced as under: - Penalty u/s 271(1)(c) is separately as assessee has concealed the income. Relevant contents of the Penalty Order are reproduced as under: - As the assessee had not filed any appeal against order of the A.O. and it appears that the assessee is satisfied with the order passed by the A.0.. Therefore, it appears that the assessee has nothing to say and has no objection regarding imposing the penalty us/ 271(1) (c) of I. T Act, 1961. Therefore, I impose a penalty of equal to 100% of tax sought to be evaded on account of the above acts of the assessee of ₹ 34,05,436/- i.e. 100% tax evaded. In the light of the above, we need to examine whether assessment order and the penalty order comply with the provisions of section 271 (1) (c) of the Act. We find that on page 3 of the assessment order, the assessing officer, A.O. observed as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has nothing to say and has no objection regarding the imposing of the penalty under section 271 (1) (c) of the Act. In our considered view, the assessing officer was not justified in imposing the penalty on this basis the action of the assessing officer is contrary to the provision of law. The Hon'ble Jurisdictional High Court in the case of Shevata Construction Co. Pvt. Ltd. in ITA No. 534/2008, at Para 9 of its order has held as under: - ...... Taking into consideration the decision of the Andhra Pradesh High Court which virtually considered the subsequent law and the law which was prevailing on the date the decision was rendered on 27.08.2012. In view of the observation made in the said judgement, we are of the opinion that the contention raised by the appellant is required to be accepted and in the finding of Assessing officer in the assessment order it is held that the A.O. has to give a notice as to whether he proposes to levy penalty for concealment of income or furnishing inaccurate particulars. He cannot have both the conditions and if it is so he has to say so in the notice and record a finding in the penalty order .... (Emphasis Supplied). Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) was got wrongly withdrawn under misconception and in case of assessee himself for A.Y. 2007-08 on the same facts the Hon'ble ITAT did not upheld disallowance of 15% of purchases but ordered to assess the income of assessee on average gross profit declared and admitted by the A.O. and attained finality. Thus judgement is now being followed in deciding appeals on the same issue before CIT (A) ITAT and if that would have applied in the case for this year there would not remain any disallowance out of the purchases held unverifiable in the case for this year. Thus the addition is estimated and unsubstantiated addition which do not fall within the purview of Section 271 (1) (c). The assessee furnished all particulars correctly and no deficiency or mistake found therein and technically. invoking of provision of section 145 (3) is on account of and lack of verifiability of some purchases made while the G.P. rate declared by assessee was much better than in previous years and no trading addition would have been called for and thus it is not a case of furnishing inaccurate particulars as held by Ld. A.O. Thus the additions is purely on estimate. It is settled law that additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de on account of non-genuine or bogus purchases but were estimated additions out of purchases wherein the A.O. by estimating disallowed 25% of the purchases thereof on account of unverifiability of purchases while allowing 75% of said purchases as allowable. Further in appeal, the ld. CIT(A) by estimating disallowed 15% thereof on account of unverifiability of purchases and at the same time, allowed 85% of said purchases. In this way, according to the ld AR, the purchases cannot be held to be bogus as the said purchases were held by both the authorities as unverifiable because 85% of the same purchases have also ready been allowed by the ld. CIT(A). Thus, according to the ld. AR, it is a case where purchases are not doubted but bills of purchases were held unverifiable because of non-verification thereof from sellers. 13. The additions in the present case have been made as trading additions by invoking Section 145(3) of the Act. As per the ld. AR, the appeal filed by the assessee against order of ld. CIT(A) was got wrongly withdrawn under misconception and in assessee s own case for the preceeding year i.e. A.Y. 2007-08 on the same facts, the ITAT did not uphold disallowance o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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