2013 (11) TMI 369

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.... erred in confirming penalty levied u/s 271(1)(c) of the Income Tax Act, 61." 3. Briefly stated relevant facts of the case are that the assessee is an individual and received income from brokerage. Assessee filed the return of income u/s 139(1) for the AY 2003-04 declaring the total income of Rs. 97,669/-. There was a search action u/s 132 of the Act on the assessee on 18.12.2008. In response to the notice issued u/s 153A of the Act, assessee filed return of income on 30.3.2009 declaring the total income of Rs. 30,26,460/-, which includes an additional income of Rs.29,28,791/-. The details of additional income for six AYs are tabulated as follows. 3.1. Assessment was completed u/s 143(3) of the Act on 29.12.2010 and the total income of the assessee was determined at Rs. 31,98,460/- for the AY 2003-2004 and the details of assessed income for other AYs are given in the table above. During the assessment proceedings, AO accepted the income returned u/s 153A of the Act. Accordingly, AO initiated penalty proceedings u/s 271(1)(c) of the Act by levying minimum penalty at 100% of tax i.e., Rs. 9,30,200/- and passed penalty order on 29.6.2011. The details of penalty imposed for 6 ....

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....ce issued under section 274 read with section 271 of the Income Tax Act, 1961 dated 29.12.2010, copies of which are placed at page 1 to 6 of the paper book, and mentioned that the Assessing Officer has not specified if the notice was issued for "concealment of the particulars of income" or "furnishing inaccurate particulars of such income". 7. Thus, the Ld Counsel argued stating that the Assessing Officer is not clear, at the time of initiating the penalties whether the proceedings are initiated for "concealment of particulars of income‟ or „for furnishing the inaccurate particulars of such income‟. Further, Ld Counsel mentioned that Assessing Officer initiated the penalties for "furnishing inaccurate particulars of such income" and however, he levied the penalty for "concealment of the particulars of such income". Thus, the initiation was done under one limb of the provisions of the Act and penalties were levied in another limb of the section 271(1)(c) of the Act. Further, he extended the arguments by stating that such penalty proceedings are not sustainable in law. For this proposition, Ld Counsel relied on the judgment of the Hon‟ble Karnataka High Cou....

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.... income of Rs. 31,98,460/-. Charge interest u/s 234B & 234C as applicable. Give credit for taxes paid after due verification. Issue demand noticed and challan accordingly issue show cause notice for initiating penalty u/s 271(1)(c) of the IT Act, 1961 for furnishing inaccurate particulars of the income. This order is passed after getting approval from Addl. CIT, Range-4, Central Circle-II, Mumbai vide his letter No. Addl CIT C.R.4/Approval-153D/2010-11, dated 29.12.2010." 11. From the above, the penalties were to be initiated either for "furnishing inaccurate particulars of income" and not for "concealment of income". However, the AO is under obligation to specify the same and should not leave the scope for imaginations and surmises. At the end, we find that the penalty was actually levied „for concealment of (particulars) of income‟ which is evident from para 4 of the assessment order which reads as under:              "4. From the above, I am satisfied that the assessee has concealed the particulars of income so as to evade tax and as such penalty u/s 271(1)(c) of the Act is leviable. The tax on the und....

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....oned 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(l)(c) when it i....