TaxTMI 
TaxTMI 
2016 (5) TMI 977
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....vely. The assessee also recorded total receipts on sale proceeds from Sajjan Kumar Masakara Rs. 60,73,711/-. The net liability payable by Sajjan Kumar Maskara as per the books of accounts of the assesee was thus Rs. 22,86,631/- as on 31.03.2009. On verification by the AO Shri Sajjan Kumar Maskara had shown purchases from the assessee of only Rs. 34,23,711/- and Rs. 26,70,045/- as per bill No.15/08-09 and 14/08-09 respectively. He had also shown that he had paid Rs. 60,73,711/- to the assessee and further debited on account of defective quality of soya of Rs. 20,045/-. There was thus a difference of Rs. 22,86,631/- between the figure of sales shown by the assessee and that shown by Sajjan Kumar Maskara. The assessee had shown sales more by Rs. 22,86,631/- which the AO wanted to treat as unexplained cash credit u/s 68 of the Act. 4. Besides the above, the assessee had shown outstanding dues payable to Bholanath Rice Mill of Rs. 9,00,000/- but the aforesaid party has shown as outstanding to the party as nil. The AO therefore wanted to treat the aforesaid sum of Rs. 9,00,000/- as a benefit that accrued to the assessee as a result of cessation of liability and wanted to bring the sam....
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....guilty of having 'concealed particulars of income' or of having furnished 'inaccurate particulars of income'. The ld. Counsel for the assessee placed reliance on the decision of ITAT, Kolkata Bench in the case of Suvaprasanna Bhattacharya vs ACIT vide ITA No.1303/Kol/2010 order dated 06.11.2015 wherein this Tribunal took a view that in a case where show cause notice before imposing penalty does not spell out as to whether penalty proceedings are initiated for concealment of particulars of income or furnishing of inaccurate particulars of income, then the very initiation of penalty proceedings are invalid and the consequent order imposing penalty on the assessee is liable to be quashed. The ld. DR placed reliance on the orders of the revenue authorities. 9. We have given a very careful consideration to the rival submissions. As rightly contended by the ld. Counsel for the assessee, in the order of the assessment the AO has not initiated penalty proceedings u/s 271(1)(c ) of the Act. As rightly pointed out by the ld. Counsel for the assessee even in the assessment proceedings the AO has not made any reference to the provision of section 271(1)(c) of the Act in the show cause notic....
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....l 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. 8.2 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 th....
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....t 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 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). Conc....
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....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 s....