TMI Blog2021 (9) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... h, the assessee has filed his explanation and thereafter the AO has clearly recorded that it is a case of concealment of particulars of income - under similar circumstances in the case of Grass Field Farms Resorts (P) Ltd. [ 2015 (9) TMI 1585 - ITAT JAIPUR] held that notice cannot be held as invalid merely for the reason that the AO has issued notice for both limbs and levied penalty for one limb. There is no error in the reasons given by the ld. CIT(A) to confirm penalty levied by the AO u/s. 271(1)(c) - Decided in favour of Revenue. - ITA Nos. 263 & 264/CHNY/2017 - - - Dated:- 18-8-2021 - V. Durga Rao, Member (J) And G. Manjunatha, Member (A) For the Appellant : K. Raghu, CA For the Respondents : G. Suresh Periasamy, JCIT ORDER Per G. Manjunatha, AM These two appeals filed by the assessee are directed against orders of learned Commissioner of Income Tax (Appeals)-2, Coimbatore, both dated 31.10.2016 and pertains to assessment years 2010-11 2011-12. Since, facts are identical and issues are common, for the sake of convenience these appeals were heard together and are being disposed off, by this consolidated order. 2. The assessee has more or le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepting income returned without making any further addition. 4. The AO, simultaneously has issued notice u/s. 274 r.w.s. 271(1)(c) of the Act, for levying penalty for concealment of income or furnishing inaccurate particulars of income. In reply, the assessee submitted that he has neither concealed, nor furnished inaccurate particulars of his income in the return of income filed pursuant to notice u/s. 148 of the Act and hence, the question of levy of penalty u/s. 271(1)(c) of the Act does not arise, when there is no addition to returned income. The AO, however was not convinced with the explanation furnished by the assessee and according to him, had enquiry u/s. 131(1A) of the Act was not carried out in the case of the assessee, it was not come to the notice of the Department, the undisclosed income for the relevant assessment years and hence, he opined that even though, the assessee has admitted income in the return of income filed u/s. 148 of the Act and further, no addition was made to returned income in assessment proceedings, but the return itself amounts to concealed income because, the assessee has not filed his regular return of income on or before the due dates specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee challenged penalty levied by the AO u/s. 271(1)(c) of the Act on two grounds. The assessee has first challenged levy of penalty on the ground that the AO has not made specific charge on the assessee, whether he is levying penalty for concealment of particulars of income or furnishing inaccurate particulars of income. For this, he has relied upon the decision of Hon'ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton and Ginning Factory, (2013) 359 ITR 565. The assessee has also challenged penalty levied by the AO on the issue of satisfaction by the AO and argued that unless the AO records required satisfaction, whether assessee has concealed particulars of income or furnished inaccurate particulars of income, no penalty can be levied u/s. 271(1)(c) of the Act. The assessee has also challenged penalty levied by the AO on merits in light of Explanation - (3) to Section 271(1)(c) of the Act and argued that conditions prescribed under Explanation - (3) has not satisfied, because the AO has issued notice u/s. 148 before the due date prescribed for completion of assessment u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the AR. It is an admitted fact that the appellant has not been filing income tax returns for the last five or six years prior to this year despite conducting Real Estate Business on a large scale and carrying on high value transactions in cash and through bank account. He has been earning handsome incomes, much higher than the lower slab of income and liable to payment of income tax. This is evident from the incomes declared by the appellant himself in the returns of earlier years and this year as well filed after the enquiries of the Department. The appellant never paid any taxes nor had filed returns of income before. Even for this assessment year, the appellant did not pay any advance tax during the relevant previous year. The due date for filing of return had expired. The time permitted for filing belated return had also expired but no return was filed till that date. It was only after the enquiries conducted by the Investigation Wing and impounding of certain documents evidencing income, the appellant had no choice but to file returns of income for the last four years and for this assessment year. The incomes offered for earlier years clearly come under Explanation (3) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 171 Taxman 19(Mad.) and M. Sajjanraj Nahar V. CIT [2006] 283 ITR 230/155 Taxman 536 (Mad), wherein, this court had elaborately considered the case law on the subject and pointed out to the decision of the Supreme Court in the case of K.P. Madhusudhanan (supra), rendered after the introduction of Explanation to section 271(1) of the Income tax Act. This court held that when the concealment of the income was with reference to the original return and there was explanation at all as regards the nondisclosure the mere claim that the income was offered in the revised return, as a matter of purchasing peace, by itself, would not exonerate the assessee from the culpability. Having regard to the fact that the asses see had not disclosed any reason for the omission in the original return and that the revised return was filed only after the search, this court held that penalty was leviable The facts herein are no different from the abovesaid decisions. As seen from the narration in the order of the Tribunal as well as that of the other authorities, the assessee filed the revised return only after survey operation in the business premises of the assessee. The conduct of the assessee, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of C.L. Swamy between 10.07.1982 and 17.07.1982. The account itself had been closed on 13.08.1982, in the light of these facts, the contention that the revised return was filed voluntarily is untenable. It was provoked y the evidence collected by the revenue and the survey conducted in the assessee's premises on 06.10.1983. In other words the revised return was filed by the assessee only when it was concerned and the income tax authorities had collected material on the basis of which it could be said that the claim foe deduction was false or bogus. The filing of the revised return is thus an act of despair and the assessee can gain nothing from it. 4.4 The above decisions confirm the view that concealment is with reference to original return. In the appellant's case, there was no original return also, which means that whole of the income shown in the return in compliance to notice u/s. 148 is concealed income. In my view, there is no need to rely on Explanation (3) to Sec. 271(1)(c) and in fact the AO has also not brought in this Explanation while levying penalty. The appellant's case falls under the main provision of Sec. 271(1)(c). As it can be understood from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, one is concealing the particulars of income and second for furnishing of inaccurate particulars of income. The AO cannot initiate penalty proceedings for one offence and then finally levy the penalty for another offence, because in such circumstances the assessee will not get proper opportunity to explain the charge leveled against him. Their Lordships have also noticed that the facts of some cases may attract both the offences and in some cases there may be overlapping of these two offences, but in such cases the initiation of penalty proceedings should also be for both the offences. In my opinion, under the facts of the assessee's case, if may attract both the offences i.e., the concealment of income as well as furnishing of inaccurate particulars of income and therefore the Assessing Officer rightly initiated penalty proceedings for both the offences. In the penalty notice also both the offences were mentioned and therefore, the assessee got the adequate opportunity to explain its stand with regard to both the offences. Thereafter, the Assessing Officer levied the penalty only for furnishing of inaccurate particulars of income. Since, the initiation of penalty proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cally charged the assessee under which limb the proposed penalty proceedings was initiated. The Hon'ble Supreme Court in the case of CIT vs. SSA's Emerald Meadows, has considered the issue while dismissing the SLP filed by the Revenue against the decision of Hon'ble High Court of Karnataka in the case of CIT vs. Manjunatha Cotton and Ginning Factory, supra and hence law is very clear in respect of show-cause notice that unless the AO specifically charges the assessee under which limb the proposed penalty is levied, the whole proceedings becomes invalid and unsustainable in law. 8. The ld. DR on the other hand strongly supporting order of the CIT(A) submitted that it is a clear case of concealment of particulars of income which is evident from facts brought out by the AO during the course of assessment proceedings that the assessee has not filed regular return of income for the impugned assessment years even though, he had taxable income. Although, the assessee has filed return u/s. 148 of the Act and admitted income but, fact remains that had enquiry was not conducted u/s. 131(1A) of the Act, the income of the assessee goes unnoticed and hence, it is a clear case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed u/s. 148 of the Act and further, the AO has not made any additions, but whether such admission of income in the return filed u/s. 148 is voluntary or after the Department cornered the assessee with necessary materials, has to be seen. In this case, admittedly the assessee has not filed any return of income before due dates specified u/s. 139(1)/139(4) of the Act. It is also an admitted fact that had investigation was not carried out u/s. 139(1A) of the Act, the income of the assessee goes unnoticed. In these circumstances, it is difficult to accept the arguments of the assessee that he had filed returns voluntarily in response to notice u/s. 148 of the Act and admitted true and correct income. Therefore, we are of the considered view that the case of the assessee comes under Explanation-(1) but not under Explanation-(3) of Section 271(1)(c) of the Act. 11. We, further are of the opinion that under the given facts and circumstances of the present case, it should be construed that it is a case similar to where regular return has been filed without showing true and correct income and the same was subsequently declared in a return filed in response to notice u/s. 148 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely different and hence, we are of the considered view that the case law relied upon by the assessee has no application to facts of present case. 12. As regards arguments of the assessee in light of the decision of Hon'ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton and Ginning Factory, supra, we find that although it is necessary to record satisfaction before issue of notice u/s. 274 r.w.s. 271 of the Act, by the AO, whether the proposed penalty proceedings is initiated for concealment of particulars of income or furnishing of inaccurate particulars of income, but fact remains that Hon'ble Supreme Court in the case of MAK Data (P) Ltd. vs. CIT, supra, had considered an identical issue and held that the AO has to satisfy whether the penalty proceedings be initiated or not during the course of assessment proceedings and the AO is not required to record his satisfaction in a particular manner or reduce it into writing. Thus, the only requirement of law is, the AO has to satisfy himself about initiation of penalty proceedings, but such satisfaction need not be in writing or in a particular manner. In this case, the AO after recording relevant facts of conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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