TaxTMI 
TaxTMI 
TaxTMI 
2016 (10) TMI 935
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....the residential premises of the assessee on 12.07.2010. During the course of search, an undisclosed Bank account maintained by the assessee with IDBI Bank, Gariahat Road Branch, Kolkata, was found. In his statement recorded under section 132(4), the assessee agreed that the transactions reflected in the said Bank account were not accounted for by him. He also agreed to surrender his undisclosed income on account of such transactions. In the returns of income filed originally in response to the notices issued by the Assessing Officer under section 153A of the Act for all the four years under consideration, the assessee, however, did not offer or disclose any amount of such income surrendered during the course of search in respect of the transactions reflected in his undisclosed Bank account. At the fag end of the proceedings under section 153A read with section 143(3), the assessee filed revised returns for all the four years under consideration on 21.03.2013 declaring such undisclosed income. Although the assessments under section 153A/143(3) for all the four years under consideration were made by the Assessing Officer vide his orders dated 31.03.2013 on the same income as declared....
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.... hence, the assessee in respect of year wise income has been deduced from the transactions of undisclosed bank account no.086104000105095 of IDBI Bank Ltd, Gariahat, Kolkata may be deemed to have concealed the particulars [i.e. account no.086104000105095 of IDBI] of his income". 3. The penalties imposed by the Assessing Officer under section 271(1)(c) for all the four years under consideration were challenged by the assessee in the appeals filed before the ld. CIT(Appeals) and since the submission made by the assessee in this regard was not found acceptable by him, the ld. CIT(Appeals) proceeded to confirm the penalties imposed by the Assessing Officer under section 271(1)(c) for all the four years under consideration for the following reasons given in paragraph no. 5 of his impugned order passed for A.Y. 2007-08, which are identical for the remaining three years as well :- "5. I have considered the facts of the case and perused the material on record. I find that search u/s 132 was conducted on 12-07-2010 at the residential premise of the assessee thereby resulting in the recovery of unaccounted cash of Rs. 35 lakhs and undisclosed bank account held by the assessee in the IDBI B....
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....d consequently the assessee was not lawfully competent to file the revised return. I uphold the finding of the AO that the revised return filed by the assessee on 2103-2013 was not valid in law. The assessee therefore cannot be permitted to argue that he had declared the undisclosed income of Rs. 15,71,724/- in his return. The Ld AR has argued before me that the assessee voluntarily admitted the undisclosed income and so there was no lawful case for levy of penalty u/s 271(1)(c). I however having considered the facts of the case do not find merit or substance in the arguments of the Ld AR. The conduct of the assessee does not suggest or indicate that the undisclosed income was voluntarily surrendered by him. The assessee on the contrary chose to take his chances and deferred till the last moment the declaration of the undisclosed income in his return. I find from the assessment order that the search at the residential premise yielded recovery of cash of Rs. 35 lakhs but the assessee instead of admitting its ownership initially tried to shift onus by claiming that the money belonged to the KPC Medical College & Hospital. I find that no disclosure of undisclosed income was made by th....
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....assessment was made on the basis of estimate. I however find that the assessment in the present case involves no estimation. The search conducted at the residential premise of the assessee resulted in recovery of unaccounted money and undisclosed bank account. The unaccounted money so found and the unaccounted income represented by the undisclosed bank account was eventually surrendered by the assessee as his undisclosed income. The unaccounted income represented by the undisclosed bank account was determined on the basis of the transactions made through the bank account. The break-up of the disclosure made by the assessee and the computation of income made by the AO in the impugned order clearly suggested that the undisclosed income was meticulously worked out on the basis of the material found in the search. I therefore reject the argument that the assessment was made on the basis of estimation. The assessment on the contrary was made on the basis of the evidence recovered in the search and the undisclosed income was meticulously worked out from the transactions recorded in the undisclosed bank account of the assessee. But even otherwise, the deeming provisions as contained in Ex....
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....viz. "furnished inaccurate particulars of income" or "concealed particulars of such income" was not struck off by the Assessing Officer. In this regard, it is observed that the Coordinate Bench of this Tribunal in the case of Suvaprasanna Bhattacharya -vs.- ACIT (ITA No. 1303/KOL/2010) cited by the ld. Counsel for the assessee had an occasion to consider a similar issue in the identical fact situation and the order passed by the Assessing Officer imposing penalty under section 271(1)(c) was held to be invalid by the Tribunal relying on the decision of the Hon'ble Karnataka High Court in the case of CIT & Another -vs.- Manjunatha Cotton & Ginning Factory reported in 359 ITR 565 after discussing the proposition laid down therein in great detail in paragraph no. 8 to 8.2 of its order dated 06.11.2015, which read as under:- "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 particulars of such income". On this aspect we find that in the show cause notice u/s.274 of the Act the AO has not struck out the ....
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....(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 offences. But drawing up penalty proceedings for one offence and finding the assessee guilty of another offence or finding him guilty for ....
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....d 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) (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 the Assessment Order or order of the Appellate Authority or Revisional Authority. f) Even if there is no specific finding regarding the ex....
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....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 which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty pro....