TMI Blog2017 (4) TMI 1590X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Respondent : Ms Arju Garodia ORDER PER SANDEEP GOSAIN, JUDICIAL MEMBER: This appeal by the assessee is directed against the order of CIT(A)-7, Mumbai dated 24.10.2011 confirming the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 (in short the Act ) for A.Y. 2005-06. 2. The facts of the case, briefly, are as under: - 3. The assessee, a company engaged in the business of Finance, investment and dealing in shares and derivatives, filed its return of income for A.Y. 2005-06 on 31.10.2005 declaring income of NIL after set of brought forward loses and paid taxes on book profit of Rs. 3,45,02,979 u/s 115 JB of the Act. The case was taken up for scrutiny and the assessment was completed under section 143(3) of the Act vide order dated 29.11.2007 wherein the assessment was completed on book profit of Rs. 4,25,77,068 and income under normal provison at Rs. 14,89.774 after making additions /disallowance with reference to which penalty u/s 271(1)(1) of the Act was ordered to be initiated. On appeal, Ld. CIT(A) upheld the additions /disallowance against which the assessee had preferred appeal before Hon ble ITAT. Since the tax evasion was found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out recording any satisfaction whether the penalty proceedings are initiated for furnishing inaccurate particulars or concealment of income, the penalty order passed u/s 271(1)(c) of the Act is sustainable in the eyes of law? 2. Whether on facts and circumstances of the case and in law, the CIT(A) erred in initiating and directing levying of fresh penalty u/s 271(1)(c) without recording satisfaction or issuing notice u/s 274 of the Act? 3. The appellant craves leave to add to, alter, amend and/or delete all or any of the above grounds of appeal.. 4.1 The additional grounds of appeal (supra) are raised challenging the validity of the notice issued under section 274 r.w.s. 271(1)(c) of the Act dated 29.11.2007, which is without any mention of the default of the assessee for which penalty proceedings are initiated (copy of the notice dated 29.11.2007 is placed in assessee s paper book-28-29). The learned A.R. for the assessee also placed before us a copy of the decision of the Bangalore Bench of the Tribunal in the case of Roadlinks India Pvt. Ltd. vs. ACIT in ITA No. 1485/Bang/2013 dated 27.02.2015, wherein the Bench in similar circumstances has admitted the additional grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings are in the nature of civil liability, in fact, it is penal in nature. In either event, the person who is accused of the conditions mentioned in Section 271 should be made known about the grounds on which they intend imposing penalty on him as the Section 274 makes it clear that assessee has a right to contest such proceedings and should have full opportunity to meet the case of the Department and show that the conditions stipulated in Section 271(1)(c) do not exist as such he is not liable to pay penalty. The practice of the Department sending a printed farm where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law when the consequences of the assessee not rebutting the initial presumption is serious in nature and he had to pay penalty from 100% to 300% of the tax liability. As the said provisions have to be held to be strictly construed, notice issued under Section 274 should satisfy the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended if the show cause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee. 60. Clause (c) deals with two speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pai reported in 292 ITR 11 at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations, The Gujarat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 171 Taxman 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Thom, when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. The conclusion drawn therein by their Lordships at para 63 thereof and particularly at p) to s) thereof are as under: - 63 . a) . p) Notice under section 274 of the Act should specifically state the ground mentioned in Section 271(1)(c), i. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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