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Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Before: Shri P.M. Jagtap & Shri S.S.Viswanethra Ravi
SHRI S.S.VISWANETHRA RAVI, JM
These two appeals of the asessee arise out of the two separate orders of the CIT(A)-Central-III, Kolkata in Appeal Nos. 81/CC-VII/CIT(A), C-I/09-10 & 82/CC-VII/CIT(A),C-I/09-10 dated 07-03-2011 and 04-03-2011 for the assessment years 2005-06 and 2006-07 respectively against the orders of penalty levied u/s. 271(1) ( c) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’).
ITA No. 921/Kol/2011 A.Y 2005-06 ( by the assessee) 2. In this appeal, the assessee has raised the following ground of appeal:- “That the Ld. CIT(A) erred in confirming the imposition of penalty u/s. 271(1) ( c) of the I.Tax Act @ 100% amounting to Rs.3,56,422/- on the amount of income disclosed u/s. 132(4)
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and included in the return filed u/s. 153A. The penalty levied is wrong and need to be deleted.”
ITA No. 922/Kol/2011 A.Y 2006-07 ( by the assessee) 3. In this appeal, the assessee has raised the following ground of appeal:- “That the Ld. CIT(A) erred in confirming the imposition of penalty u/s. 271(1) ( c) of the I.Tax Act @ 100% amounting to Rs.2,29,779/- on the amount of income disclosed u/s. 132(4) and included in the return filed u/s. 153A. The penalty levied is wrong and need to be deleted.”
Besides above, the appellant assessee has initially raised the following common additional grounds of appeal for both the assessment years under consideration:-
“1. That the ld. AO erred in not mentioning the limb of sec 271(1) ( c) that has been violated by the assessee, in the notice issued u/s. 274 r.w.s 271 of the Income Tax Act 1961. Further, the ld. AO has not recorded any satisfaction as to whether the assessee has concealed his income or has furnished inaccurate particulars of his income in the penalty issued u/s. 274/271 of the Income Tax Act 1961. Hence, the penalty proceeding is bad in law and the same is liable to be quashed.“
After hearing both the parties and perusing the material available on record, we admit the additional grounds as raised by the assessee for both years since the issue involved therein is a legal issue and all the facts necessary for adjudication thereof are already available on record. With the consent of parties both the cases heard together and answer the same collectively and consolidated order is passed.
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Brief facts of the case are that the assessee is a company and mainly engaged in business of transportation, civil construction and other related contractual jobs. A search and seizure operation was conducted u/s. 132 of the Act in the case of M/s. Dhansar Engineering Company Pvt. Ltd and its associates on 22-08-2007 and subsequent dates. In the course of post search proceedings M/s. B.K. Agarwalla & Sons, HUF filed a disclosure petition dated 24-09-2007 before the AO, DDIT(Inv), Kolkata declaring total disclosure of Rs.2.50 crores, wherein the assessee made its disclosure to the extent of Rs.16,52,160/-. In response to notice dt: 12-05-2008 issued u/s. 153A of the Act, the assessee filed his revised return of income on 11-09-2008 showing total income of Rs. 39,01,810/- as against the total income of Rs. 32,20,620/- declared u/s. 139(1) under original return filed on 19-12-2005 for A.Y 2005- 06.
In the course of search proceedings the assessee filed its explanation regarding cash etc... as found during the search with full particulars containing books of account etc. before the AO . The AO examined the same and no adverse inference was drawn against the assessee and the revised return of income as filed in response to notice dt: 12-05-2008 issued u/s. 153A of the Act was accepted by the AO. Accordingly, he determined the total income of the assessee at Rs.36,33,300/- u/s. 153A/143(3) of the Act by an order dated 02-06- 2009 for the assessment year 2005-06 i.e under consideration. Thereafter, the AO issued show cause notice to the assessee u/s. 274 r.w.s 271 why the penalty u/s. 271(1) (c) of the Act should not be imposed against the assessee for not recording an amount of Rs.9,71,298/- stated to have been found in the residence of one Sri. Ravi Agarwala referring to seized document RAD/1 during search operation in books of account and not disclosing in the original return. In
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response to such penalty notice the assessee submitted that the said additional income above was offered by the assessee claiming as its own and disclosed the same in the return filed u/s. 153A of the Act and which shall be treated as original return filed u/s. 139(1) of the Act. After considering the various submissions of the assessee, the AO was of the view that the assessee concealed particulars of income and not disclosed in the return filed u/s. 139 and accordingly, he imposed penalty of Rs.3,55,422 & Rs.2,29,779/- for both the assessment years under consideration imposition of penalty u/s. 271(1) ( c) for concealment of particulars of income. Relevant findings of the AO for imposition of penalty are reproduced herein below for the sake of clarity:-
Besides the above the A.O. in the assessment order disallowed a sum of Rs. 48,568/- being valuation fee. The A.O. considered the valuation fee as not allowable as business expenditure. However, the valuation fee was for the purpose of valuing the assets hypothecated to the bank for renewal of working capital loan.
As regards, the penalty proceedings u/s. 271(1)( C ) for concealment of income, it has been admitted by the AO that this amount represents a sum disclosed u/s 132(4), as such Explanation 5 to section 271( 1) ( c) would come into force and the said explanation absolves the asseesee from the burden of penalty under the said section provided that the facts are disclosed in the said disclosure and tax together with interest, if any, is paid by the assessee. In his case, the assessee included this income in his return flied u/s l53A and tax was also paid.
It is further submitted here that the additional income, included in the return u/s 153A by the assessee was with regard to the disclosure made by the assessee u/s 132(4) for the A/Ys 2005- 06 & 2006-07. so, returning higher income u/s 153A only reveals the good intention of the assessee which has been wrongly interpreted as concealment of income by the assessee. The income offered in the return u/s 153A is soumoto, before it could have been identified by you. No show cause notice was ever issued by you of department in connection with the
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same. Hence the same can't be treated as concealment of income in any year. As such penalty can't be imposed on such amount disclosed in the return filed u/s 153A, keeping in view the provision of Explanation 5 to Sec. 271(l)(c).
Further, we would like to draw your land attention to the provision of Sec. 153A(1) (a) of the I.T Act that a return filed in response to the notice u/s 153A of the I.T. Act will be treated as return filed u/s. 139 of the l.T. Act and all provisions of I. T. Act will apply as the return is filed u/s 139 of the I.T. Act.
In view of me above fact the return filed u/s 153A will have same treatment as return filed u/s 139 of the I.T. Act. The income disclosed m the return u/s 153A will be treated as income disclosed in the return filed u/s 139 of the l.T. Act.
The return filed earlier years were abated by issue of nonce u/s 153A. Now, the return filed u/s. 153A is the only return filed u/e 139(1) of the I.T. Act.
“As per Explanation 5 to Sec. 27(1) (c) no penalty is leviable if the return is filed u/s. 139(1) of the I.T Act including the additional income. In view of the provisions of Sec. 153A, old returns & proceeding relating to the year are abated and new proceeding started with reference to new return filed, which is a return filed under 139 of the I.T. Act, as per Sec.153A(1)(a) of the I.T . Act.”
In this case during the search seizure proceedings, certain incriminating documents/books of accounts were found which clearly reveals that the assessee had earned income which was not disclosed in the return of income filed by the assessee u/s 139(1) with the I.T. Department. Only when search was conducted and those incriminating documents, unexplained jewellery etc are unearthed in course of search and the assessee was confronted with the same, the assessee had no other option but to make disclosure of incomes. Hence it is obvious that the income filed u/s. 153A was not disclosed voluntarily but directly related to the search took place . Had the search not taken place, the assessee would have never come out with the disclosure is voluntarily.
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The fact that the assessee had come out with the disclosure does neither mean that the assessee had not concealed its income nor does it mean that the disclosure was voluntarily. The disclosure would have been deemed to be voluntarily, had the assessee come out with the disclosure prior to search. As such the assessee’s contention that the income disclosed was voluntary and the prayer that the proceeding should be dropped is not accepted.
The contention of the assessee that Explanation 5 of section 271(1) ( c) is applicable is wrong since the said Explanation is applicable in respect of search initiated before 01.06.2007 but in this case search was initiated on 22.08.2007 i.e. after 01.08.2007. In respect of search initiated u/s. 132(1) on or after 01.08.2007, newly inserted Explanation 5A, inserted by Finance Act, 2007 w.e.f 01.06.2007 and as substituted by Finance ( no.2) Act, 2009 w.e.f 01.06.2007 is applicable. In the instant case the search was initiated after 01.06.2007 and therefore, the Explanation 5A is applicable since the assessee filed the return u/s. 139 before the date of search and the income was declared therein. Accordingly, notwithstanding that the income has been declared in the return (u/s. 153A) filed after the date of search, the assessee shall be deemed to have concealed the particulars of income.
Regarding the assurance of the DDIT(Inv), as claimed by the assessee, the assessee could not produce any supporting documents/communication in writing of DDIT (Inv) in respect of such assurance that penalty shall not be levied.
The assessee has also relied upon the judgements of the following cases:- 1. Illumination India –Vs- Asst.CIT(2006) 100 TTJ 426(Pune) 2. CIT –Vs- Suresh Chandra Mittal (2001) 170 CTR 182(SC) 3. Lotus learning (P) Ltd –Vs- DCIT (2006) 7 SOT 540(Mum) 4. CIT –Vs- Punjab Tyre 162 ITR 571 5. CIT –Vs- Shiv Oil and Dal Mill (2006) 281 ITR 221(All) 6. Navbharat Enterprises (P) Ltd –Vs- Asstt.CIT (2009) 118 ITD 8(Hyd) 7. CIT –Vs- Santosh Financier (2001) 247 ITR 742 (Kar) 8. Addl.CIT –Vs- Jeevan Lal Sah (1994) 205 ITR 244(SC) 9. CIT –Vs- S. Dhanabai (2009) 178 Taxman 242 (Delhi)
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I have gone through the gist of the decisions. Most of the cases are factually different from the instant case. The decisions are in respect of provision existing prior to the insertion of Explanation 5A. The instant case is not a case of any bonafide claim of expenses having been disallowed. As regards intention of the assessee, the concealment of income has been detected in action of search & seizure and as such malafide is apparent. In view of the above and the Explanation 5A, the assessee’s explanations are not satisfactory.
In view of above, I am satisfied that this a fit case for imposition of penalty u/s. 271(1) ( c) for concealment of particulars of income in the return filed u/s. 139 and accordingly, an amount of Rs.3,55,422/- is imposed as penalty u/s. 271(1) (c ) of the I.T Act, 1961. “
Aggrieved by such order of the AO, the assessee preferred an appeal before the CIT-(A). Before him the assessee reiterated the submissions as made before the AO during the assessment proceeding u/s. 153A as well as penalty proceeding u/s. 271(1) ( c) of the Act. The specific finding of the CIT-(A) was that the assessee concealed the particulars of income as that the undisclosed income as found and declared thereafter u/s. 153A which was not declared in the original return, accordingly, made applicable the Explanation 5A of S. 271(1) ( c) of the Act and confirmed the penalty order as imposed by the AO by observing as under:-
“4. I have carefully considered the submission of the L.d A.r . There is no dispute that during the course of search evidence of unaccounted interest income earned during the F.Y.2004-05 amounting to Rs. 9,71,2981 was found . The return of income for the year under consideration was filed by the assessee, as per provision of section 139(1) of the Act on 19.12.2005 but the above income was not declared in the return filed under section 139(1) of the Act. However in the return filed in response to notice under section 153A the above unaccounted income 1 investment was duly declared. Now
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the issue to be decided whether the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income and is liable for penalty under section 271(1) (C) of the Act.
4.1 According to the L.d A,r since the undisclosed income has been duly offered for taxation in response to the return filed under section l53A of the Act, the appellant is not liable for penalty. The submission of the assessee was considered and found to have no merit in the light of the explanation 5 A to section 271 (l) ( c) inserted by the finance Act 2007 which reads as under:
"Explanation 5A - Where in the course of search initiated under section 132 (on or after the I" day of June, 2007), the assessee is found to be the owner of- (a) any money, bullion, jewellery or other valuable article or thing (hereinafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilizing (wholly or in part) his income for any previous year; or (b) any income based on any entry in any books of account or other documents or transactions and the claims that such entry in the books of , account or other documents or transactions represents his income (wholly or in part) for any previous year' which has ended before the date of the search and
(a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein:
(b) the due date for filing the return of income for such year has expired and the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished 'on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particular of his income or furnished inaccurate particulars of such income. " 4.2 From the plain reading of the explanation 5A , it is apparent that if any undisclosed income is found or declared after the date of search initiated under section 132 on or after the 1.06.2007 , the assessee will be liable for penalty on the said income/ investment not
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already declared in the return filed under 139(1) of the Act. In the case under consideration, the assessee had filed return of income for the previous year in question on 19.12.2005. However the income in question was not offered in the said return filed under section 139(1) of the Act. . Hence notwithstanding that such income is declared by him in return of income furnished after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub- section (1) of this section, be deemed to have concealed the particular of his income or furnished inaccurate particulars of such income. Considering above I don’t find any infirmity in the order of the A.O. Further the decisions relied by the L.d A.r are not applicable as the fact of the case and provisions of the Act applied by the A.O is not comparable. More over since the A.O has already imposed minimum penalty, hence no further relief can be granted. Accordingly the penalty of Rs.3,55,422/- imposed by the A.O under section 271(1) ( C) is confirmed.”
Challenging the impugned order of the CIT(A), the assessee is in appeal before us by raising the additional ground of appeal for both the assessment years under consideration, which have been mentioned herein above.
During the course of hearing before us the Ld. Counsel for the assessee contended that the case on hand is covered and falls for consideration of Judgment of the Hon’ble Karnataka High Court in the case of CIT & Anr. v. Manjunatha Cotton and Ginning Factory, 359 ITR 565 (Karn), wherein the Hon’ble High Court has held that in order to impose penalty u/s. 271(1) (c ) of the Act the AO is bound to make specific allegation referring on what charge the AO is imposing penalty whether it is for concealment of income or furnishing any inaccurate particulars of income. The Ld.AR pointed out to the notice 02-06-2009 issued u/s. 274 r.w.s 271(1) (c) of the Act wherein the AO failed to strike out the irrelevant charge in the printed format of said notice. Further, notice issued u/s. 274 of the Act should specifically state as to whether
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penalty is being proposed to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of income. He also relied on the order dated 06-11-2015 of the Tribunal in the case of Suvaprassanna Bhattacharya Vs. ACIT, Kolkata in ITA No. 1303/Kol/2010 for the AY 2006- 07.
On the contrary, the ld. DR has relied on the orders of the lower authorities. He further submitted that the case is not covered by the said Judgment of the Hon’ble Karnataka High Court in the case of supra.
Heard the rival submissions and perused the material available on record. The question before us is as to whether the penalty notice and order passed thereafter by the AO and confirmed by the CIT(A) falls for consideration in pursuance of the Judgment of the Hon’ble Karnataka High Court supra. That on perusal of the said show cause notice issued u/s. 274 r.ws. 271(1)( c) of the Act purportedly issued to show cause why the penalty shall not be imposed, We find that irrelevant portion of such notice was not struck out by the AO. Therefore, the said notice is not clear whether it was issued for furnishing of inaccurate particulars of income or concealment of particulars of such income. We find that the assessee as relied on the “B’’ Bench of Kolkata Tribunal order dated 06-11- 2015 in the case of Suvaprassanna Bhattacharya Vs. ACIT, Kolkata in ITA No. 1303/Kol/2010 for the AY 2006-07 is applicable to the case on hand. The relevant findings in the order of Tribunal are reproduced herein below for better understanding:- “8. The next argument that the show cause notice u/s. 274 of the Act which is in a printed form does not strike out as to whether the penalty is sought to be levied on the for ”furnishing inaccurate particulars of income “ or concealing particulars of such income”.
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On this aspect we find that in the show cause notice u/s. 274 of the Act the AO has not struck out the irrelevant part. It is therefore not spell out as to whether the penalty proceedings are sought to be levied for “furnishing inaccurate particulars of income “or “concealing particulars of such income”.
The Hon’ble Karnataka High Court in the case of CIT & Anr. v. Manjunatha Cotton and Ginning Factory, 359 ITR 565 (Karn), has held that notice u/s. 274 of the Act should specifically state as to whether penalty is being proposed to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of income. The Hon’ble High court has further laid down that certain printed form where all the grounds given in section 271 are given would not satisfy the requirement of law. The Court has also held that initiating penalty proceedings on one limb and find the assessee guilty in another limb is bad in law. It was submitted that in the present case, the aforesaid decision will squarely apply and all the orders imposing penalty have to be held as bad in law and liable to be quashed. 5.1 The Hon’ble Karnataka High Court in the case of CIT & Anr. v. Manjunatha Cotton and Ginning Factory (supra) has laid down the following principles to be followed in the matter of imposing penalty u/s.271(1)(c) of the Act. “NOTICE UNDER SECTION 274 59. As the provision stands, the penalty proceedings can be initiated 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
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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 specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two offences but in such cases the initiation of the penalty proceedings also must be for both the offences. But drawing up penalty proceedings for one offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law. It is needless to point out satisfaction of the existence of the grounds mentioned in Section 271(1)(c) when it is a sine qua non for initiation or proceedings, the penalty proceedings should be confined only to those grounds and the said grounds have to be specifically stated so that the assessee would have the opportunity to meet those grounds. After, he places his version and tries to substantiate his claim, if at all, penalty is to be imposed, it should be imposed only on the grounds on which he is called upon to answer. It is not open to the authority, at the time of imposing penalty to impose penalty on the grounds other than what assessee was called upon to meet. Otherwise though the initiation of penalty proceedings may be valid and legal, the final order imposing penalty would offend principles of natural justice and cannot be sustained. Thus once the proceedings are initiated on one ground, the penalty should also be imposed on the same ground. Where the basis of the initiation of penalty proceedings is not identical with the ground on which the penalty was imposed, the imposition of
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penalty is not valid. The validity of the order of penalty must be determined with reference to the information, facts and materials in the hands of the authority imposing the 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 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. Therefore, 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 pro forma without striking of the relevant clauses will lead to an inference as to non-application of mind.” The final conclusion of the Hon’ble Court was as follows:- “63. In the light of what is stated above, what emerges is as under: a) Penalty under Section 271(1)(c) is a civil liability. b) Mens rea is not an essential element for imposing penalty for breach of civil obligations 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.
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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 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 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 all facts relating to the same and material to the computation of his total income have been disclosed by him, no penalty could be imposed.
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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 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 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
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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. For the reasons given above, we hold that levy of penalty in the present case cannot be sustained. We, therefore, cancel the orders imposing penalty on the Assessee and allow the appeal by the Assessee.
In the present case, as we noted above, the AO failed to strike out the irrelevant portion in the said show cause notice, Respectfully following the order above, we cancel the penalty levied u/s. 271(1) ( c) of the Act by the Assessing Officer as confirmed by the CIT-(A) for both the assessment years under consideration. Therefore, preliminary issue as raised by the assessee by way of additional ground for assessment year 2005-06 is allowed, in view of the same the other grounds raised requires no adjudication, therefore, all are dismissed.
ITA No. 922/Kol/2011 A.Y 2006-07 ( by the assessee)
In this appeal, in response to notice dt: 12-05-2008 issued u/s. 153A of the Act, the assessee filed his revised return of income on 11-09-2008 showing total income of Rs. 1,96,35,280/- as against the total income of Rs. 1,89,19,800/- as declared u/s. 139(1) under original return filed on 29-11-2006 for A.Y 2006-07. The AO imposed penalty of Rs.2,29,779/- for the assessment year 2006-07. In view of the discussion in above paras, we cancel the penalty levied u/s. 271(1) ( c) of the Act by the Assessing Officer as confirmed by the CIT-(A) for A.Y 2006-07.
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In the result, the appeals of assessee are allowed.
THIS ORDER IS PRONOUNCED IN OPEN COURT ON 10/06 /2016
Sd/- Sd/- P.M. Jagtap S.S.Viswanethra Ravi Accountant Member J Judicial Member
Date 10 /06 /2016
Copy of the order forwarded to: 1.. The Appellant/Assessee : M/s. Dhansar Engineering Pvt. Ltd, Near Dhansar Temple, Dhansar, Dhanbad 2 The Respondent/Department- TheAsstt. Commissioner of Income-tax, CC-VII, 18 Rabindra Sarani, Kolkata-700001. 3 /The CIT,
/The CIT(A) 4.. 5. DR, Kolkata Bench 6. Guard file. True Copy, By order, Asstt Registrar
** PRADIP SPS
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