MIHIR CHANDRA DUTTA,KOLKATA vs. ACIT, CIR-51, KOLKATA, KOLKATA

Per Shri J. Sudhakar Reddy, A.M. This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)-XXXII, Kolkata dated 08.11.2013 for the assessment year 2009-10, where the first appellate authority has confirmed the order of the Assessing Officer passed under section 271(1)(c) of the Act. The grounds of appeal read as follows:- (1) For that the penalty orders u/s 271(1)(c) of the I.T. Act, 1961 is void-ab-initio. The ld. AO had not recorded the reasons specifically while initiating it in assessment order. Therefore, the penalty is liable to be deleted. (2) For that the assessee during assessment proceeding accepted the addition made and as per the order u/s 143(3) of the Act agreed to pay the assessed tax of Rs.19,35,458/-. The levy of the penalty u/s 271(1)(c) of ./2014 Assessment year: 2009-2010 Page 2 of 5 the Act is unjustified and against the direction of the Hon’ble Supreme Court as in Sri Shadilal Sugar & general Mills Ltd. –vs.- CIT 168 ITR 705.

(4) For that after the survey proceedings dated 06.03.2009 the Assessing Authority did not supply the books of account before filing of return u/s 139(1) of the Act for AY 2009-10 and for that reason the assessee did not able to calculate his concealment. The impounded documents were handed over during the time of assessment proceeding. Then the assessee was able to calculate and surrender the amount and he paid the tax accordingly. This fact was explained in all the forums. Hence, the penalty cannot be levied as the assessee discharged the primary burden by cogent explanation and the ld. AO was unable to revert the same.

(5) For that the penalty u/s 271(1)(c) of the Act of Rs.14,40,594/- is bad in law.

“(a) Penalty under Section 271(l)(c) is a civil liability.

(b) Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities.

(c) Wilful concealment is not an essential ingredient for attracting civil liability.

(d) Existence of conditions stipulated in Section 271(l)(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(l)(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 tax liability is admitted is not automatic.

(k) Even if the assessee has not challenged the order of assessment levying tax and interest and has paid tax and interest that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment order that, it is on account of such unearthing or enquiry concluded by authorities it has resulted in payment of such tax or such tax liability came to be admitted and if not it would have escaped from tax net and as opined by the Assessing Officer in the assessment 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 bonafide, an order imposing penalty could be passed.

(m) If the explanation offered, even though not substantiated by the assessee, but is found to be bonafide and all facts relating to the same and material to ./2014 Assessment year: 2009-2010 Page 4 of 5 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(l)(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 would not satisfy requirement of law.

(r) The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee.

(s) Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law.

(t) The penalty proceedings are distinct from the assessment proceedings. The proceedings for imposition of penalty though emanate from proceedings of assessment, it is independent and separate aspect of the proceedings.

(u) The findings recorded in the assessment proceedings insofar 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 ours).