TaxTMI 
TaxTMI 
TaxTMI 
2016 (4) TMI 552
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....essment Year Income returned (Rs.) 2002-02 9,24,202/- 2002-03 7,31,722/- 2004-05 4,95,693/- 2005-06 13,59,795/- 3. There was a search and seizure operation carried out u/s.132 of the Income Tax Act, 1961 (Act) on 23.8.2006 by the Income Tax department on the Builder Group of Cases of which the Assessee was a member. In the course of search, the Assessee was found to be in possession of undisclosed cash, and undisclosed income. The details are as given below :- S.No. Particulars of Income Amount (Rs.) 1. On account of cash found at residence & office 19,00,000/- 2. Income from relinquishment of tenancy rights at 9/12, Lal Bazaar Street, Kolkata. 92,45,700/- 3. Accretions from 4, Chowringhee Lane, Kolkaya from 01.01.2005 to 18.08.2006 2,62,76,335/- 4. Jessore Road Project of Diamond Group 12,00,000/- 5. Various miscellaneous transactions and receipts from 1st April, 2005 to 22nd August, 2006 26,00,000/- Total 4,12,22,035/- In effect, the assessee was in possession of undisclosed cash and income of Rs. 4,12,22,035/-. 4. The assessee made a disclosure u/s 132(4) of the I.T.Act, 1961, admitting the undisclosed income of Rs. 4,12,22....
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....ssessee is for furnishing inaccurate particulars of income or for concealing particulars of income. 8. Before CIT(A) the assessee submitted that the assessee was entitled to immunity under Explanation 5 to section 271 of the Act as the assessee satisfies all the conditions laid down therein. The assessee also contended that Explanation 1 to section 271(1)(c) of the Act was not applicable to the case of the assessee because the assessee offered explanation in the course of assessment proceedings while offering additional income to tax and such offering was accepted by the AO without any modification and without any finding whatsoever against the bona fide of the workings submitted for the additional disclosure. The assessee also relied on certain judicial pronouncements in support of its claim that he was entitled to immunity under Explanation 5 to section 271 of the Act. 9. CIT(A) firstly held that Explanation 1 to section 271(1)(c) of the Act was applicable in the case of the assessee because the assessee had not furnished any bona fide explanation in the penalty proceedings to explain the reasons as to why he had not admitted the entire incomes in each of the returns filed u/s ....
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....4,957/- , and interest u/s.234D of Rs. 13,517/- , aggregating to Rs. 9,44,996/- , which had been discharged in part by way of TDS of Rs.l,63,242/-, self assessment tax u/s.140A of Rs. 5,27,991/- and regular tax of Rs. 2,01,275/-paid on 22-07-2008. The appellant is still due to pay tax and interest of Rs. 53,445/- . For Assessment Year 2005-06, the appellant on a total income of Rs. 84,75,7201- was liable to pay tax of Rs. 28,23,757/-, interest u/s.234A of Rs. 28,237/- , interest u/s.234B of Rs. 9,16,087/- and interest u/s.234C of Rs. 1,04,477/- ,aggregating to Rs. 38,72,558/- which had been discharged in part by way of self assessment tax u/s.140A of Rs. 25,67,626/- and regular tax of Rs. 7,29,558/- paid on 11-09-2008. The appellant is still due to pay tax and interest of Rs. 5,75,374/- . Appellant had not paid the entire tax with interest on the disclosed incomes for the Assessment Years. 2001-02, 2002-03, 2004-05 and 2005-06, and, hence, has not satisfied conditionality of tax payment. From the above facts it is seen that the appellant has not satisfied all the conditions, cumulatively, under Clause (2) to Explanation 5 to Section.271(1)(c) of the I.T.Act, 1961 in respect o....
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....so apparent from the impugned order of my predecessor-inoffice and his orders in the related cases of the same group that his decision was based on the amounts due, in his opinion, as on the date of passing of the appellate order. Therefore, as a matter of abundant precaution, I decided to refer the matter to the AO who is the best person to certify the demand and payment position of the assessee. Vide this office letter No.CIT(A)/C-III/AMQPS2466J/KOL/2010-11/38 dated 29.04.2010 the chart showing liabilities as well as payments furnished by the assessee was forwarded to the AO who was requested to certify as to whether the appellant has paid all the taxes together with interest for the assessment years 2001-02, 2002-03, 2004-05 and 2005-06 before the appeal order dated 26.08.2009. Vide his letter No.DCIT/CCI/ Kol/Remand/2010-11/52 dated 10.05.2010 the AO has categorically stated "On verification of the records, it is seen that in the case of the assessee Shri Amar Nath shroff (AMQPS2466J), there was no demand outstanding as on the date of appellate order viz., 26.08.2009 for the A. Yrs. 2001-02, 2002-03 and 2004-05. For assessment year 2005-06, it is seen that there was a demand of....
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.... been a part of the Departmental records. So, I am of the opinion that there is a mistake apparent in the Appellate Order dated 26- 8-2009 passed in this case in ascertaining the correct factual position relating to payment of tax interest made by the Appellant/ Applicant on the disclosure of income made by him in course of the search. Such mistake needs to be rectified in the interest of justice as well as in terms of section 154 of the Act since all taxes having been paid by the Appellant/Applicant, he satisfied the requirements of availing itself of the immunity granted as per Explanation (5) u/s 271(1)(c) of the Income Tax Act, 1961. Therefore, the prayer for rectification u/s 154 of the Act 271 (l)( c) of the Income Tax Act, 1961. Therefore, the prayer for rectification u/s 154 of the Act is allowed on merit by this combined order for all the assessment years namely 2001-02, 2002-03, 2004-05 and 2005-06. Such rectification has the effect of allowing the Appeal also for all the four assessment years which was dismissed previously by the Order dated 26-8-2009 on an apparently erroneous finding of fact." 16. This order of CIT(A) was passed on 26.05.2010. Aggrieved by the order....
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.... also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income." In the present appeal we are concerned with clause (2) of Expln.5 to Sec.271 of the Act. In this regard it was brought to our notice that in the order dated 26.8.2009 passed by the CIT(A) which is impugned in the appeals filed by the Assessee, the satisfaction of the condition that (a) Income declared in the return of income filed u/s.153A of the Act, has been disclosed in a statement u/s 132(4) of the Act. And (b) In such statement the assessee specifies the manner in which such income has been derived has been accepted by the CIT(A) and the revenue has not challenged the said finding. The CIT(A) in the order dated 26.05.2010 of CIT(A)-Central-III, Kolkata has accepted that taxes due on the income so disclosed together with interest are paid by the Assessee. In the appeal filed by the revenue against the aforesaid order of CIT(A) dated 26.5.2010, the revenue cannot challenge any other finding except the specific finding of the CIT(A) in the said order with regard to payment of taxes on the income disclosed. It was submitte....
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.... vs DCIT in ITA No.05/Kol/2010 for A.Y.2003-04 dated 02.12.2015 wherein it was held that such defect in the show cause notice u/s.274 of the Act renders the order imposing penalty illegal. 20. We have carefully considered the rival submissions. As rightly pointed out by the learned counsel for the assessee the CIT(A) has in the original order dated 26.08.2009 accepted that the assessee satisfies all the conditions for grant of immunity under Explanation (5) to section 271 of the Act except the condition with regard to payment of tax with interest. In the order dated 26.8.2009 passed by the CIT(A) which is impugned in the appeals filed by the Assessee, the satisfaction of the condition that (a) Income declared in the return of income filed u/s.153A of the Act, has been disclosed in a statement u/s 132(4) of the Act. And (b) In such statement the assessee specifies the manner in which such income has been derived has been accepted by the CIT(A) and the revenue has not challenged the said finding. In the order dated 26.05.2010 passed u/s 154 of the Act, the CIT(A) has found that the condition with regard to payment of taxes on income declared in the return of income filed u/s.153A of....
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....rlier part of this order, nowhere spells out or indicates that the AO was of the view that the Assessee was guilty of either concealing particulars of income or furnishing inaccurate particulars of income. The offer to tax of income by the Assessee has just been accepted. It is no doubt true that it is not the requirement of the law that the satisfaction has to be recorded in a particular manner, especially after the introduction of the provisions of Sec.271(1B) of the Act with retrospective effect from 1.4.1989. Nevertheless, as laid down by the Hon'ble Delhi High Court in the case of Ms.Madhushree Gupta (supra), the position of law both pre and post Sec.271(1B) of the Act is similar, inasmuch, the AO will have to arrive at a prima facie satisfaction during the course of proceedings with regard to the assessee having concealed particulars of income or furnished inaccurate particulars, before he initiates penalty proceedings. 'prima facie' satisfaction of the AO that the case may deserve the imposition of penalty should be discernible from the order passed during the course of the proceedings. At the stage of initiation of penalty proceeding the order passed by the AO need not refl....
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.... observations in the last portion of para-9 of the said judgment. Therefore even the Hon'ble supreme court's decision suggests that the satisfaction need not be recorded in a particular manner but from a reading of the assessment order as a whole such satisfaction should be clearly discernible. If the AO accepts all the contentions of the Assessee and the offer of income that has not been declared in the return of income to tax without indicating either directly or indirectly that the Assessee has concealed particulars of income or furnished inaccurate particulars of income, it cannot be said that satisfaction for initiation of penalty proceedings is discernible from the order of assessment. If the Assessee in good faith offers income to tax voluntarily prior to any positive detection by the AO, such voluntary offer cannot be taken advantage of by the AO to initiate penalty proceedings against the Assesssee without specifying the reasons why penalty proceedings are initiated u/s.271(1) ( c) of the Act. In the present case, we have read the order of assessment as a whole and are satisfied that satisfaction for initiation of penalty proceedings is not discernible from the order of as....
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....ould 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 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 justic....
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.... 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 proforma 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....
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....losed 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 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. T....