TMI Blog2016 (12) TMI 1902X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty of Rs. 56,285/- u/s. 271(1)(c) of the Act. 3. I have heard the rival submissions and perused the orders of lower authorities and materials available on record. 4. Brief facts of the case are that in the assessment made u/s.143(3) of the Act dated 13.9.2013, the Assessing Officer made addition of Rs. 1,82,146/ on account of purchase of NSC of Rs. 1,64,695/- and saving bank interest of Rs. 4351/- aggregating to Rs. 1,82,146/-. Thereafter, the Assessing Officer levied penalty u/s.271(1)(c) of the Act of Rs. 56,285/- for concealment of income. 5. On appeal, ld CIT(A) confirmed the action of the Assessing officer. 6. Before me, ld A.R. of the assessee filed a paper book, wherein, at page 5 placed is a copy of notice u/s. 274 r.w.s. 271(1)(c) of the Act. He pointed out that in the said notice, the Assessing Officer has observed as under: Whereas in the course of proceedings before me for the assessment year 2011-12, it appears that you have concealed the particulars of your income or furnished inaccurate particulars of such income. 7. Hence, he pointed out that the notice has been issued without application of mind by the Assessing officer as to whether the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on various ground set out therein. If the order passed by the Authority categorically records a finding regarding the existence of any said grounds mentioned therein and then penalty proceedings is initiated, in the notice to be issued under Section 274, they could conveniently refer to the said order which contains the satisfaction of the authority which has passed the order. However, if the existence of the conditions could not be discerned from the said order and if it is a case of relying on deeming provision contained in Explanation-1 or in Explanation-1 (B), then though penalty proceedings 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 mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty at the time the order was passed and further discovery of facts subsequent to the imposition of penalty cannot validate the order of penalty which when passed, was not sustainable. 61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that 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 Pal 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. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order. l) Only when no explanation is offered or the explanation offered is found to be false or when the assessee fails to prove that the explanation offered is not bona fide, an order imposing penalty could be passed. m) If the explanation offered, even though not substantiated by the assessee, but is found to be bona fide and ail facts relating to the same and material to the computation of his total income have been disclosed by him, no penalty could be imposed. n) The direction referred to in Explanation IB to Section 271 of the Act should be clear and without any ambiguity. o) If the Assessing Officer has not recorded any satisfaction or has not issued any direction to initiate penalty proceedings, in appeal, if the appellate authority records satisfaction, then the penalty proceedings have to be initiated by the appellate authority and not the Assessing Authority. p) Notice under Section 274 of the Act should specifically state the grounds mentioned in Section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income q) Sending printed form where all the ground mentioned in Section 271 are mentioned w ..... 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