TMI Blog2022 (5) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... d Hon ble Shri Manoj Kumar Aggarwal, Am For the Appellant : Shri D. Anand (Advocate) Ld. AR For the Respondent : Shri G. Johnson (Addl. CIT) Ld. Sr. DR ORDER PER BENCH 1. Aforesaid appeals by assessee for Assessment Years (AY) 1998- 99 to 2005-06 arises out of the common order passed by the learned Commissioner of Income Tax (Appeals)-18, Chennai [CIT(A)] on 21.09.2020 confirming penalty u/s. 271(1)(c) of the Act as levied by the Ld. AO vide separate orders. 2. The facts leading to penalty are pari-materia the same in all the years and therefore, adjudication in any one year shall be equally applicable to the other years also. For the purpose of adjudication, facts from AY 1998-99 have been considered in the appeal. The grounds raised by the assessee read as under: 1. The order of the learned Commissioner of Income (Appeals)-18, is wrong, illegal and is opposed to law. The learned Commissioner (Appeals) erred in law and on facts in confirming the action of learned assessing officer in levying penalty under section 271(1)(c). 2. The learned Commissioner Of Income (Appeals)-18 ought to have seen that the appellant has neither furnished inaccurate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has to be considered and that merely because the assessment proceedings have been confirmed does not automatically mean that penalty u/s 271(1)(c) is justified, unless the case is strictly covered by s. 271(1)(c). 3.1 Drawing our attention to Ground No.3, the Ld. AR placed on record notices issued by Ld. AO u/s. 274 r.w.s. 271(1)(c) of the Act and submitted that no specific charge was made against the assessee which would vitiate the penalty proceedings as per settled legal position. Reliance has been placed on the decision of Hon ble Madras High Court in Babuji Jacob vs ITO (430 ITR 259) as well as the decision of Hon ble Bombay High Court in PCIT V/s Goa Coastal Resorts and Recreation (P.) Ltd (272 Taxman 157) against which revenue s Special Leave petition (SLP) has already been dismissed by Hon ble Supreme Court which is reported at 130 Taxmann.com 379. 3.2 The Ld. Sr. DR, on the other hand, relied on the decision of the Hon ble High Court of Madras in M/s. Gangotri Textiles Ltd vs DCIT (121 Taxmann.com 171) as well as another decision in Sundaram Finance Ltd. Vs. ACIT (93 Taxmann.com 250) against which the assessee s SLP has already been dismissed by Hon ble Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th a direction issued under sub-section (2A) of section 142 no. ___________ date_____________ * have concealed the particulars of your Income or furnished inaccurate particulars of such income. You are hereby requested to appear before me at 46, M.G. Road, Chennai -34 at 3 AM/PM on 04.05.2006 and show cause why an order imposing a penalty on you should not be made under section 271 of the Income Tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorized representative your may show cause in writing on or before the said date which will be considered before any such order is made under section 271. (M. RAJASEKHAR IRS) Deputy Commissioner of Income Tax, Central Circle II(2), Chennai 34. 4.3 Though the assessee opposed penalty, however, Ld. AO found it fit case for levy of penalty u/s 271(1)(c) and accordingly, a penalty of Rs.5.50 Lacs was proposed in penalty order dated 25.03.2014 by observing as under: - ..The request of the assessee cannot be considered and is rejected as it is a fit case of levy penalty u/s 271(1)(c) of the Income Tax Act, 1961. I therefore propose to levy penalty u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat though the assessee canvassed placing reliance on the business model, however, it failed to establish the nature of source of deposits. It was the primary responsibility of the assessee to furnish the documentary evidences as to nature and inflow of deposits while furnishing name, address of the persons and other relevant documents to support his claim. The assessee failed to discharge this onus which led to dismissal of appeals before Tribunal. 5.4 Another argument that levy of penalty was not automatic, Ld. CIT(A) held that penalty u/s 271(1)(c) was a civil liability and mens-rea need not be proved. From the facts, it was clear that the assessee concealed its particulars of income. The particulars filed in the return of income were not accurate or exact. Therefore, since the assessee could not substantiate his claim that the private parties gave jewellery and cash for equivalent amount of cheques. The assessee could not provide the list of such parties and did not maintain any books of accounts on the commission received in this regard. In the absence of satisfactory explanation, the penalty was to be upheld. 5.5 Aggrieved as aforesaid, the assessee is in further appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income and furnishing of inaccurate particulars of income which carry different connotation / meaning. Non-framing of specific charge against the assessee would vitiate the penalty proceedings since the penalty could be levied only for a specific charge. Furnishing of inaccurate particulars of income means, when the assessee has not disclosed the particulars correctly or the particulars disclosed by the assessee are found to be incorrect whereas, concealment of particulars of income would mean that the assessee has concealed the income and has not reflected certain income in its return of income. It could be seen that the show-cause notice issued u/s 274 r.w.s 271 was a vague notice in a printed form without specifying the exact charge for which the assessee was being penalized and therefore, it was a clear case of non-application of mind while initiating penalty against the assessee. The Ld. AO, while initiating the penalty was not clear as to specific limb which was applicable to given factual matrix. This is further fortified by the fact that no such exact charge has not been framed in the penalty order. 9. At this juncture, it would be useful to take note of the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same and completed the assessment vide order dated 30.3.2016 under Section143(3) of the Act and made additions as mentioned above. Thus, there was no allegation in the assessment under Section 143(3) of the Act that there had been concealment of particulars of income. 21. Admittedly, all the amounts were received by the assessee through banking channels and he had mentioned about the same in his return of income. The only mistake done by the assessee was to treat both the lands as agricultural lands. Once the notice under Section 143(3) of the Act was issued, the assessee was able to convince the Assessing Officer that the lands in Pudhupakkam Village were to be treated as agricultural lands. But, he was unable to convince the Assessing Officer that the lands in Egattur Village were agricultural lands, which were treated to be a capital asset. Therefore, there wasno material available with the Assessing Officer to allege concealment of particulars of income. 22. With regard to furnishing of inaccurate particulars, the stand taken by the assessee was that both lands were agricultural lands, that he had been carrying on agricultural operations for 27 years, that he had been f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that there is no specific finding as regards the concealment against the assessee because, on facts, it has been established before the Assessing Officer while completing the assessment under Section 143(3) of the Act that all transactions were through banking channels. Hence, the argument of Mrs.R.Hemalatha, learned Senior Standing Counsel appearing for the Revenue that both limbs of Section 271(1)(c) of the Act are attracted has to necessarily fall. Hence, we hold that there is inherent defect in the notice dated 30.3.2016 issued under Section 271(1)(c) of the Act, as it will vitiate the entire proceedings. 26. Since we have heard the learned counsel on the correctness of the orders passed by the Assessing Officer, the CIT(A) and the Tribunal on the merits of the matter, we proceed to discuss the otherissues as well. 27. The CIT(A), while confirming the order of penalty, took note of the order passed by the Assessing Officer wherein the Assessing Officer rejected the explanation offered by the assessee, which ultimately resulted in an addition and the assessment was completed vide order dated 30.3.2016. The question would be as to whether rejection of the explanation an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the explanation, then the onus was on the department to prove that there was concealment of particulars of income or furnishing inaccurate particulars of income. In the instant case, such onus which shifted on the department has not been discharged. In the circumstances, we do not find that there is any ground for this Court to substitute our interfere with the finding of the Tribunal on the aspect of the bonafides of the conduct of the assessee. 30. In the instant case, the assessee offered an explanation and we find the explanation to be cogent because all deposits were made through banking channels and out of two properties sold, the Assessing Officer accepted the assessee's stand that one of the properties was an agricultural land. Hence, we find that the burden cast upon the assessee to offer an explanation stands fulfilled. Consequently, the burden now shifts to the Revenue to establish the concealment of income or furnishing of inaccurate particulars of income or both. If the Revenue does not agree with the explanation offered by the assessee as in the instant case, then the onus is on the Revenue to prove that there was concealment of particulars of income or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied Explanation (1B) to Section 271(1)(c) of the Act and imposed penalty. 35. In the instant case, the assessee has been able to explain the transaction even at the first instance i.e. while submitting the reply dated 15.3.2016 in response to the notice under Section 143(2) of the Act, which explanation he maintained till he filed an appeal before the Tribunal. Therefore, on facts, the decision of the Hon'ble Supreme Court in the case of K.P.Madhusudhanan is distinguishable. 36. Further, the CIT(A) found fault with the assessee in not challenging the assessment order and for having accepted the same. However, this cannot be a ground to enable the Assessing Officer to automatically levy penalty. In this regard, it is beneficial to refer to the decision of the Hon'ble Division Bench of this Court in the case of CIT Vs. Smt.Anitha Kumaran [reported in (2017) 79 Taxmann.com304] wherein the decision of the Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Products (P) Limited [reported in (2010) 322 ITR 158] was followed wherein the Hon'ble Supreme Court examined the issue threadbare and discussed at length as to what was meant by the expression ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n has concealed the particulars of his income or furnished inaccurate particulars of such income.... 9. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word inaccurate has been defined as:- not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript . We have already seen the meaning of the word particulars in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) the circumstances must show that there was animus i.e. conscious concealment or act of furnishing inaccurate particulars on the part of the assessee. 38. Further, the decision of the Hon'ble Division Bench of this Court in the case of CIT Vs. S.I.Paripushpam [reported in (2001) 118 Taxman 844] would support the case of the assessee. In the said case, the Appellate Assistant Commissioner, in the penalty proceedings, held that the amount, the addition of which was agreed to by the assessee was an amount, which had been set out in an enclosure filed along with the return. While testing the correctness of the order, the Tribunal held that the levy of penalty under Section 271(1)(c) of the Act was wholly unwarranted as there had been no fraud or wilful neglect and that the assessee had only, with a view to cooperate with the Department, agreed to the addition. We observe that the above position will help the assessee, as there is not even a remote allegation that there was any fraudulent act by the assessee or the assessee was guilty of wilfully or negligently concealing the income and that his agreement to the addition of the amount, by itself, will not establish fraud or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struck off. This coupled with the fact adverted to in paragraph (5) of this order, leaves no ground for interference with the impugned order. The impugned order are quite consistent by the law laid down in the case of Samson Perinchery and New Era Sova Mine(supra) and therefore, warrant no interference. 8. The contention based upon MAK Data (P.) Ltd.(supra) also does not appeal to us in the peculiar facts of the present case. The notice in the present case is itself is defective and further, there is no finding or satisfaction recorded in relation to concealment or furnishing of inaccurate particulars. 9. For the aforesaid reasons, we hold that no substantial questions of law arises in this appeal. Consequently, this appeal is dismissed. The revenue s SLP against this decision has already been dismissed by Hon ble Supreme Court on 31.08.2021 (130 Taxmann.com 379) by observing as under: - 1. Delay condoned. 2. We are not inclined to interfere with the impugned order. 3. The special leave petition is, accordingly, dismissed. 4. Pending application stands disposed of. 11. Similar is the decision of Hon ble Bombay High Court rendered in CIT Vs. Sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 182. More particularly, a penal provision, even with civil consequences, must be construed strictly. And ambiguity, if any, must be resolved in the affected assessee's favour. 183. Therefore, we answer the first question to the effect that Goa Dourado Promotions and other cases have adopted an approach more in consonance with the statutory scheme. That means we must hold that Kaushalya does not lay down the correct proposition of law. Question No. 2: Has Kaushalya failed to discuss the aspect of 'prejudice'? 184. Indeed, Kaushalya did discuss the aspect of prejudice. As we have already noted, Kaushalya noted that the assessment orders already contained the reasons why penalty should be initiated. So, the assessee, stresses Kaushalya, fully knew in detail the exact charge of the Revenue against him . For Kaushalya, the statutory notice suffered from neither non-application of mind nor any prejudice. According to it, the so-called ambiguous wording in the notice [has not] impaired or prejudiced the right of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f disapproves of the routine, ritualistic practice of issuing omnibus show-cause notices. That practice certainly betrays nonapplication of mind. And, therefore, the infraction of a mandatory procedure leading to penal consequences assumes or implies prejudice. 189. In Sudhir Kumar Singh, the Supreme Court has encapsulated the principles of prejudice. One of the principles is that where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, except in the case of a mandatory provision of law which is conceived not only in individual interest but also in the public interest . 190. Here, section 271(1)(c) is one such provision. With calamitous, albeit commercial, consequences, the provision is mandatory and brooks no trifling with or dilution. For a further precedential prop, we may refer to Rajesh Kumar v. CIT [(2007) 2 SCC 181], in which the Apex Court has quoted with approval its earlier judgment in State ofOrissav. Dr. Binapani Dei [AIR 1967 SC 1269]. According to it, when by reason of action on the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot proper. Therefore, the phraseology, which was adopted by the assessee, if read as a whole, would clearly show that he had objected to the issuance of the notice and as there was no basis for issuance of the notice under section 271(1)( c ) of the Act, both limbs in the said provision do not get attracted. Hence, the decision of this Court in the case of Sundaram Finance Ltd. , cannot be applied. Therefore, the ratio of this decision could not be applied in the present case. 15. In the light of aforesaid legal position, since no specific charge was framed either in the show-cause notice or in the body of penalty order and there was 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. By deleting the impugned penalty, we allow the appeal. Consequently, going into the merits of the penalty has been rendered academic in nature. 16. Similar are the facts in all the other years and impugned order is common order for all the years. The show-cause notices as well as penalty orders are substantially on the same line except for change in figures. The penalty, upon confirmation by Ld. CIT(A), is in f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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