TMI Blog2016 (2) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. - I.T.A No. 2590/Kol/2013 - - - Dated:- 2-2-2016 - Mahavir Singh (Judicial Member) and M. Balaganesh (Accountant Member) For the Petitioner : Vianeshwar Nath Dutta For the Respondent : A. R. Roy ORDER M. Balaganesh (Accountant Member) This appeal of the assessee arises out of the order of the Learned CIT(A)- XXXIII, Kolkata in Appeal No. 37/CIT(A)-XXXIII/ITO Ward 2, Hal/11-12 dated 21- 08-2013 for the Asst Year 2007-08 against the order of penalty levied by the Learned AO u/s. 271(1) (c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The only issue to be decided in this appeal of the assessee is as to whether the penalty u/s. 271(1) ( c) of the Act could be levied in the facts and circumstances of the case. 3. The brief facts of this issue are that the assessment u/s. 143(3) of the Act was completed on 29-12-2009, wherein addition to the extent of ₹ 10,61,538/- was made by the ld.AO towards cash deposits (₹ 10,11,000/-) in the bank account u/s. 68 of the Act and interest income (₹ 50,538/-) from deposits. The ld.AO initiated the penalty proceedings u/s. 271(1) ( c) of the Act for concealment of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. Thus the satisfaction of the Assessing Officer about the concealment of particulars of income or furnishing of inaccurate particulars of such income is essential before levying any penalty u/s 271(l)(c). The Assessing Officer as is apparent from the penalty order has not satisfied about the concealment of particulars of income or furnishing of inaccurate particulars of income on the part of the assessee, On this basis itself the penalty deleted ) Decision of co-ordinate bench of this tribunal in the case of Suvaprasanna Bhattacharya Vs. ACIT, Cir-55, Kolkata in ITA No. 1303/Kol/2010 for A.Y 2006-07 vide order dated 06-11-2015 , which in turn placed reliance on the decision of the Hon ble Karnataka High Court in the case of CIT Anr Vs. Manjunatha Cotton and Ginning Factory reported in 359 ITR 565 (Kar) and which considered the applicability of newly inserted provision of secton 271(1B) of the Act with retrospective effect from 1.4.1989 and the decision of the Hon ble Delhi High Court in the case of Ms. Madhushree Gupta vs Union of India reported in 317 ITR 107 (Del) in disposing the appeal of assessee on penalty levied u/s. 271(1) ( c ) of the Act. The ITAT has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rising of share application forms, bank statements, memorandum of association of companies, affidavits, copies of Income Tax Returns and assessment orders and blank share transfer 8 deeds duly signed, have been impounded in the course of survey proceedings under Section 133A conducted on 16.12.2003, in the case of a sister concern of the assessee. The survey was conducted more than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under Section 271 read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or liabilities. c) Willful concealment is not an essential ingredient for attracting civil liability. d) Existence of conditions stipulated in Section 271(1)(c) is a sine qua non for initiation of penalty proceedings under Section 271. e) The existence of such conditions should be discernible from the Assessment Order or order of the Appellate Authority or Revisional Authority. f) Even if there is no specific finding regarding the existence of the conditions mentioned in Section 271(1)(c), at least the facts set out in Explanation 1(A) (B) it should be discernible from the said order which would by a legal fiction constitute concealment because of deeming provision. g) Even if these conditions do not exist in the assessment order passed, at least, a direction to initiate proceedings under Section 271(l)(c) is a sine qua non for the Assessment Officer to initiate the proceedings because of the deeming provision contained in Section 1(B). h) The said deeming provisions are not applicable to the orders passed by the Commissioner of Appeals and the Commissioner. i) The imposition of penalty is not automatic. j) Imposition of penalty even if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u) The findings recorded in the assessment proceedings in so far as concealment of income and furnishing of incorrect particulars would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings. (emphasis supplied) It is clear from the aforesaid decision that on the facts of the present case that the show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Following the decision of the Hon ble Karnataka High Court, we hold that the orders imposing penalty in all the assessment years have to be held as invalid and consequently penalty imposed is cancelled . Respectfully following the aforesaid decisions, we have no hesitation in cancelling the impugned penalty levied u/s. 271 ( 1) ( c ) of the Act by the ld. AO and confirmed by the ld. CIT(A). The grounds raised by the assessee in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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