TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 1407
X X X X Extracts X X X X
X X X X Extracts X X X X
....eferring to the facts and issue in ITA No.1712/PN/2014 by way of consolidated order for the sake of convenience. 5. The assessee in ITA No.1712/PN/2014 has raised the following grounds of appeal:- 1. On the facts and circumstances of the case the learned CIT (A) erred in confirming the penalty of Rs. 4,71,490/- under section 271(1)(c) of the act. This penalty is levied on the basis of declaration made by the assessee in its statement at the time of search which is duly reflected in return filed thereon. There were no other documents to prove that there is a concealment of income to justify the levy of penalty. 1.1 The learned CIT (A) erred in holding that steel purchase bills found are not genuine as there is sales bills for each purchase bill supported by payment received from customers by cheque which in a way paid further to suppliers. Stock records of the same are also maintained for each item traded. 1.2 The learned CIT (A) should have appreciated the fact that going further when it was found that supplier has sold the goods at higher rate appellant had stopped purchases from those parties and made only partial write off the amount payable to two parties. 2. The appel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vied. 9. The assessee is in appeal against the order of CIT(A). 10. The learned Authorized Representative for the assessee pointed out that the assessee was engaged in trading of cement and steel. During the course of search, certain evidence was found in respect of purchase and steel from 4-5 parties and the Assessing Officer accepted the said purchases and made declaration of about Rs. 79 lakhs in various years. He further pointed out that the years under appeal were assessment years 2005-06, 2006-07, 2008-09 and 2010-11 and for assessment year 2009-10, declaration of Rs. 2 lakhs was made. Further, in response to notice under section 153A of the Act, returns of income were filed for all four years and also for assessment year 2009-10 and sum of Rs. 79 lakhs was declared and offered for taxation in the individual years. He stated that for four years in appeal, no further addition was made by the Assessing Officer. For assessment year 2009-10, the assessee offered additional income of about Rs. 2 lakhs, but no penalty proceedings were initiated or levied in the case of assessee. He first stressed that on same set of facts when no penalty has been levied in assessment year 2009-10....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... been made. However, the case of assessee here was that since an adhoc addition was made in the hands of assessee, there was no merit for levy of penalty under section 271(1)(c) of the Act. However, the learned Authorized Representative for the assessee fairly admitted that the issue of application of Explanation 5A to section 271(1)(c) of the Act is decided against the assessee by the Pune Bench of Tribunal in Mrs.Sarita Kaur Manjeet Singh Chopra Vs. ITO reported in 174 TTJ 556 (Pune). 13. Now, coming to the next plank of reasoning, the learned Authorized Representative for the assessee pointed out that on same set of facts, the Assessing Officer did not levy any penalty for assessment year 2009-10 but levied penalty for the rest of years which are in appeal i.e. assessment years 2005-06, 2006-07, 2008-09 and 2010-11. We find no merit in the said plea of assessee where each year is an independent year and the Assessing Officer having come to the satisfaction can levy the penalty for concealment of income under section 271(1)(c) of the Act, subject to the fulfillment of conditions laid down in the Statute. 14. Now, coming to the third argument of assessee i.e. the satisfaction to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....proceedings and thereafter on fixation of charge, levy the penalty for such act of concealing the particulars of income. Similarly, in cases where the assessee concerned had furnished inaccurate particulars of such income, then similar exercise has to be carried out by the concerned Officer. 14. The first stage of invocation of provisions of section 271(1)(c) of the Act is the satisfaction to be recorded by the Assessing Officer, which admittedly, has to be during the course of assessment proceedings. So, where the assessment proceedings are pending, then the Assessing Officer has to apply his mind and on being satisfied, he has to give a finding that the assessee before him has either concealed the particulars of income or furnished inaccurate particulars of income in respect of the issue before him. Thereafter, the notice should be issued to such person by the concerned Officer, wherein it should be clear that the assessee has to justify its case either for concealment of income or furnishing of inaccurate particulars of income. There may be cases where there is issue of both concealment of income and furnishing of inaccurate particulars of income, based on the nature of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 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 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 c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lead to an inference as to non- application of mind." 15. The Hon'ble Karnataka High Court has laid down the proposition that the Assessing Officer is to be satisfied in the course of proceedings that there is either concealment of income or furnishing of inaccurate particulars of income under clause (c) to section 271(1) of the Act. It has been categorically held that concealment of income and furnishing of inaccurate particulars of income are different. The Hon'ble High Court has thus, laid down that the Assessing Officer while issuing notice has to come to conclusion that whether it is case of concealment of income or case of furnishing of inaccurate particulars of income. The reliance in this regard was placed on the ratio laid down by the Hon'ble Supreme Court in T. Ashok Pai Vs. CIT (2007) 292 ITR 11 (SC), wherein at page 19 it was held that concealment of income and furnishing inaccurate particulars of income carry different connotation. Applying the said proposition, it was held that where the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similarly, for furnishing inaccurate p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s mentioned in the show cause notice were part of process of natural justice and the defect in such notice could not be overlooked. Similar proposition has further been laid down in other decisions of various Benches of Tribunal which have been relied upon by the assessee before us. 20. The learned Departmental Representative for the Revenue placed heavy reliance on the ratio laid down by the Hon'ble Bombay High Court in CIT Vs. Smt. Kaushalya (supra). In the facts of the case before the Hon'ble Bombay High Court, the Hon'ble High Court quashed the penalty levied for assessment year 1967-68 as the same was imposed without affording reasonable opportunity of hearing to the assessee. In respect of other two years where there was non-striking of inaccurate portion, the Hon'ble High Court held that the same would not invalidate the notice issued under section 274 of the Act. It was further held that the assessment orders were also made and reasons for issuing notice under section 274 r.w.s. 271(1)(c) of the Act were recorded by the Assessing Officer and since the assessee fully knew in detail the exact charge of Department against him, it could not be said that either there was non-a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Rs. 11.44 crores was made in the hands of whole group for various years. Consequent to the notices issued under section 153A of the Act for various years, different entities filed the return of income for the respective years and cumulatively for Rs. 13.99 crores as additional income. The income was declared on account of on-money on sale of plots, which was detected from the documents seized during the course of search. Admittedly, Explanation 5A to section 271(1)(c) of the Act is attracted in such cases. However, the case of assessee before us is that the Assessing Officer while completing the assessment proceedings had to be satisfied that the assessee had either concealed the income or furnished inaccurate particulars of income and is liable to levy of penalty under section 271(1)(c) r.w.s. Explanation 5A of the Act. The notice is to be issued to the assessee under section 274 of the Act. Before issuing such notice, satisfaction has to come out from the proceedings going on before the Assessing Officer. The perusal of assessment order passed in the present case reflects that the Assessing Officer while initiating proceedings has recorded satisfaction as to the assessee has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessing Officer has to make the assessee fully aware of exact charge of the Department against him. As pointed out, in present case, in the assessment order itself while recording satisfaction for initiating proceedings under section 271(1)(c) of the Act, exact charge of the Department against the assessee is not clear. The Assessing Officer records the satisfaction for initiating penalty proceedings on both the counts i.e. concealment of income and furnishing of inaccurate particulars of income. The Hon'ble Bombay High Court had also upheld the quashing of penalty proceedings for assessment year 1967-68 to be justified on account of vagueness and ambiguity in the notice issued. But the Hon'ble High Court further held that where the assessee was fully aware of exact charge of the Department against him, then technical non-striking of certain terms in the notice would not invalidate the proceedings. Where there is default in the first stage of making the assessee aware of exact charge of the Department, then initiation of penalty proceedings are vitiated and the same are to be quashed. The issue of notice under section 274 of the Act on such vagueness and ambiguity makes such notic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s relating to section 271(1)(c) of the Act issued enhancement notice to the assessee. Thereafter, he had gone through the seized documents and elaborately referred to them and even reproduced the scanned copies of such documents and comes to conclusion that loans were received from Ratanlal Bafna, but still upholds the penalty levied under section 271(1)(c) of the Act. Once the finding of CIT(A) is that these are loans received from Bafna and are not on-money received on sale of plots, then in cases where penalty proceedings have been initiated on a different footing and the CIT(A) reverses the same and holds the same to be loans received by the assessee, there is change in opinion and basis for levy of penalty for concealment varies. In such circumstances, there is no merit in levy of penalty under section 271(1)(c) of the Act and there is no merit at all in levying the penalty @ 150%. Accordingly, we allow the claim of assessee even on merits. Thus, the grounds of appeal raised by the assessee and additional ground of appeal raised by the assessee are allowed." 15. The Tribunal vide para 23 onwards had given a finding that in the absence of satisfaction recorded as to which limb....