TaxTMI 
TaxTMI 
2016 (5) TMI 1011
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the impugned penalty order was passed without recording proper satisfaction in the assessment order passed under Section 143(3) of the Act, which is sine qua non for assuming of jurisdiction. 1.2 That the Commissioner of Income Tax(Appeals) erred on facts and in law in confirming the levy of penalty solely on the basis of findings given in the assessment order, without appreciating that penalty proceedings are separate and independent from assessment proceedings and consequently, the impugned penalty order is bad in law. Without prejudice 2. That Commissioner of Income Tax(Appeals) erred on facts and in law in upholding the action of the Assessing Officer of imposition of penalty under section 271(1)(c) of the Act in respect of addition made to salary, capital gains and other income aggregating to Rs. 64,24,254/- 2.1 That the Commissioner of Income Tax(Appeals) erred on facts and in law in not appreciating that there was no concealment or furnishing of inaccurate particulars of income and therefore, there was no warrant to impost penalty under section 271(1)(c) of the Act. 2.2 That the Commissioner of Income Tax(Appeals) failed to appreciate that the appellant ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 271(1)(c) of the Act in respect of all the four additions made in the assessment order. After providing opportunity of hearing to the assessee, the Assessing Officer levied a penalty of Rs. 18,34,714/-. Aggrieved, the assessee filed appeal before the ld. Commissioner of Income-tax(Appeals), who upheld the penalty levied by the AO. Aggrieved, the assessee is in appeal before us. 3. At the outset of hearing, ld. Authorized Representative the assessee submitted not to press the ground No. 1.1 of the appeal, thus, same is held as infructuous and dismissed. 4. Rest of the grounds of the assessee revolves around levy of penalty under section 271(1)(c) of the Act. 5. The learned Authorised Representative of the assessee submitted that the assessee had suo-motu paid tax on the additional income even before the case was taken up for scrutiny. Further, he submitted that since the return was filed belated, the assessee could not revise return of income but paid the differential taxes of Rs. 1,29,430/- on 16/03/2012 and Rs. 1,870/- on 02/02/2012 and the balance was already deducted at source by the employer while issuing revised form No. 16. Further, he submitted that there was n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e have heard the rival submissions and perused the material on record. As regard to ESOP, the ld. Commissioner of Income-tax(Appeals) in the impugned order has held that (i) the assessee was fully aware of the ESOP related transaction which had taken place in the month of March 2011 and the payments credited in the assessee's bank account, as such there was no reason as to why the assessee could not have paid the tax by way of advance tax or selfassessment tax before filing the return of income, therefore, the assessee had mala fide intention of evading tax by nondisclosure of perquisites value associated with ESOP shares. (ii) the case of the assessee was picked up for scrutiny on 07/08/2013 whereas the assessee filed revised Form No. 16 along with revised computation of income with the request to rectify the assessment on 22/10/2013 (iii) the explanation offered by the assessee in respect of nondisclosure of income was without bona fide reasons and the expression offered by the assessee in this regard lacked strength. (iv) regarding nondisclosure of bank interest and foreign dividend the situation remained same as the assessee had always a detailed information regardi....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., the ld. AR submitted that mistake was due to the incorrect Form No. 16 received from the employer and it was not having any relation with the executive of a large company. The finding of the Ld. CIT(A) that the assessee failed to substantiate the explanation and failed to prove bonafide was opposed by the learned AR that the assessee had already submitted revised computation of income and paid taxes on such additional income before being detected or noticed by the Assessing Officer and, therefore, the assessee has already submitted bonafide explanation for the mistake. 10. In view of the above submissions of the ld. AR ,we are of the opinion that the assessee has offered the explanation in respect of the fact material to the computation of income and such explanation was not found to be false. We also find that the explanation furnished by the assessee is bonafide and all facts material to the computation of income has been disclosed by the assessee in the explanation furnished by her, and thus the case of the assessee is not falling under the explanation 1(A) or 1(B) of the section 271(1)(c) of the Act. 11. In the case of Qummar-ud-din and Sons (supra), the income declared....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssed income needs an explanation. (2) If no explanation is offered, levy of penalty may justified. (3) If explanation is offered, but is found to be false, penalty will be exigible. (4) If explanation is offered and it is not found to be false, penalty may not be leviable,- (a) such explanation is bona fide. (b) the assessee had made available to the Assessing Officer all the facts and materials necessary in computation of income." 32. Therefore the Explanation I understood in the proper context, in particular, clause (c) of Sub-section (1) of Section 271 makes the intention of the Legislature manifest. It clearly sets out when penalty is leviable and when penalty is not leviable. The condition precedent for levying the penalty is the satisfaction of the authority that there is a concealment of the particulars of the income or inaccurate particulars are furnished to avoid payment of tax. Once the authority comes to such conclusion, the law mandates that before imposing penalty, the assessee must be heard. The assessee is given the opportunity to offer his explanation. Once such an opportunity is given and the assessee fails to offer the explanation or ....