TaxTMI 
TaxTMI 
2016 (5) TMI 244
X X X X Extracts X X X X
X X X X Extracts X X X X
....s imposed on the Assessee by the AO in the Asst Year 2006-07 are as follows:- The Income Tax Department had conducted search and seizure operations u/s.132(1) of the Act against various persons and business concerns of the Thakur Prasad Sao Group of Chaibasa at different locations of Chaibasa and Kolkata on 23.11.2007. Survey u/s 133A of the Act was also carried out simultaneously at different places of business of the Group at Joda (Orissa), Rourkela (Orissa), Jamshedpur and Tirildih (Jamshedpur). The group is engaged in the mining of iron ore, manufacturing of sponge iron and trading in liquor. In the course of search and seizure operations, Panchanama were drawn in the names of various assesses in the Group including the assessee herein. A disclosure u/s 132(4) of the Act for Rs. 4,99,00,000/- was made by Mr.R.P.Sao, Director of the company for Asst Year 2006-07 , which was also followed by filing of return in response to notice issued u/s 153A of the Act. The assessment was completed u/s 153A of the Act determining total income at Rs. 27,14,06,050/- wherein certain additions to the tune of Rs. 58,42,500/- were made towards donation, delay in deposit in provident fund , disallo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was argued that penalty u/s 271(1)(c ) of the Act read with Explanation 5A would apply to the additions made by the Learned AO based on the seized documents or assets found and not on the income returned u/s 153A / 139 of the Act. On first appeal in the penalty proceedings, the Learned CITA held that as per the plain reading of Explanation 5A to section 271(1)(c ) of the Act, any undisclosed income which is found or declared after the date of search initiated u/s 132 of the Act on or after 1.6.2007, the assessee will be liable for penalty on the said amount which is not already declared in the return filed u/s 139(1) of the Act. Hence the Learned CIT(A) held that the assessee shall be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income and accordingly upheld the action of the Learned AO. 3.4. Aggrieved, the assessee is in appeal before us. The assessee has raised the following grounds before us :- 1) That the Ld. CIT(A) erred in confirming the penalty u/s 271(1)(c ) of the Income Tax Act @ 100% of the amount of additional income offered in the return u/s 153A of the I.Tax Act and disclosed u/s 132(4) of the Income Tax Act. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....submissions. The argument of the Learned AR was that the show cause notice u/s 274 of the Act which is in a printed form and the learned AO has not indicated in the said notice as to whether the penalty is sought to be levied on the assessee for "furnishing inaccurate particulars of income" or "concealing particulars of such income" by striking off the irrelevant portion of the printed show cause notice. On this aspect we find that in the show cause notice u/s 274 of the act, the Learned AO has not struck out the irrelevant part. It is therefore not spelt out as to whether the penalty proceedings are sought to be levied for "furnishing inaccurate particulars of income" or "concealing particulars of such income". 3.6.3. 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 of the Act are given ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y 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 pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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. 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 impos....