TaxTMI 
TaxTMI 
2016 (10) TMI 416
X X X X Extracts X X X X
X X X X Extracts X X X X
....achine due to some defects, which was not allowed by him. Accordingly, the said amount was added as income of the assessee. According to him, the assessee could not file any evidence in respect of said claim. For which notice dt. 27-12-2010 u/s. 274 r.w.s 271(1)(c) of the Act issued for initiation of penalty proceedings. The Assessing officer has initiated the penalty proceedings u/s. 271(1) (c) for willful concealment and for furnishing inaccurate particulars of income and levied penalty of Rs. 7,84,087/- U/Sec 271(1)(c) of the Act by an order dt. 24-06- 2011. Against which the assessee preferred an appeal before the CIT(A). The CIT-A found that the assessee could not able to satisfy prima facie that her claim is bonafide. Accordingly, he confirmed the penalty imposed by the AO. Aggrieved, the assessee is in appeal before us by raising the following grounds:- 1. For that the ld.CIT(A) ought to have accepted the contention of the appel lant that in view of the fact that appeal against order u/s. 143(3)/251 was pending before the Hon'ble Tribunal, this appeal in respect of the levy of penalty ought to be kept pending for disposal ti l l the appeal before the Hon'ble Tribunal was d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the penalty order passed by the AO and confirmed by the ld.CIT(A) is falls for our consideration in pursuance of the law laid down by the Hon'ble Karnataka High Court supra. 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 income or for furnishing inaccurate particulars of income. Further as submitted by the Ld.AR the aforesaid decision will squarely applicable to the present case and all the orders imposing penalty have to be held as bad in law and liable to be quashed. 6. As rightly pointed out by the Ld.AR, the co-ordinate bench of ITAT, Kolkata in the case of Suvaprasanna Bhattacharya Vs. ACIT by an order dated 06-11-2015 considered the Judgment of Hon'ble Karnataka High Court supra the relevant portion of which reproduced hereunder: 8. The next argument that the show cause notice u/s.274 of the Act which is in a printed form does not strike out as to whether the penalty is sought to be levied on the for "furnishing inaccurate particulars of income" or "concealing pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roceedings 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 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 offe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 pro forma 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, what emerges is as under: a) Penalty under Section 271(1)(c) is a civil liability. b) 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4 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. The proceedings for imposition of penalty though emanate from proceedings of assessment, it is independent and separate aspect of the proceedings. u) The findings recorded in the assessment proceedings in so far as "concealment of income" and "furnishing of incorrect particulars" would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, the validity of the assessment or reassessment in pursuance of whic....