TaxTMI 
TaxTMI 
2017 (1) TMI 996
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....g credit balance in ICICI bank Rs. 10,777/-; (iii) undisclosed investment in plots Rs. 2,15,070/-; and (iv) purchase of scooter Rs. 41,378/-. The Assessing Officer further initiated penalty proceedings u/s. 271(1)(c) of the Act on account of concealment of income in respect of additions made during assessment proceedings. The Assessing Officer vide order dated 28-06-2012 levied penalty of Rs. 2,28,572/- u/s. 271(1)(c) on concealed income of Rs. 6,72,460/-. Aggrieved by the penalty order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) rejected the contentions of the assessee and upheld the order levying penalty u/s. 271(1)(c) of the Act. Now, the assessee is in second appeal before the Tribunal impugning the upholding of penalty by the First Appellate Authority. 3. Shri Hari Krishan appearing on behalf of the assessee submitted that the penalty proceedings are bad in law as the notice issued u/s. 274 r.w.s. 271(1)(c) of the Act suffers from defect. Therefore, the penalty levied by the Assessing Officer is liable to be set aside on account of technical defect in the notice. The ld. AR submitted that a perusa....
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....he Assessing Officer rejected the bonafide submission of the assessee and made addition of income and even initiated penalty proceedings for concealment of income. 3.3 In respect of undisclosed closing cash balance in ICICI bank accounts Rs. 10,777/-, the ld. AR submitted that the amounts were deposited in the said bank accounts from sale of agricultural produce. Since, the amounts were deposited in the bank accounts from agricultural income, the same were not routed through regular cash book and remain to be included in the balance sheet. 3.4 In respect of investment in purchase of scooter, the ld. AR submitted that the assessee has purchased scooter for Rs. 41,378/-. The payment for scooter was made through ICICI Bank account. The ld. AR referred to the bank statement from ICICI Bank Ltd. at page 9 of the paper book. 3.5 In respect of investment in plots, the ld. AR submitted that the assessee had purchased 14 plots on 17-03-2009 i.e. at the fag end of the financial year ending on 31-03-2009 for a consideration of Rs. 2,00,000/-. The sale deed of the plots was registered on 17-03-2009. However, the possession of the plots was not received due to error in measurement of the plo....
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....oceedings would not automatically justify the Revenue to impose penalty under section 271(1)(c) of the Act." Thus, any addition made during assessment ipso facto would not result in levy of penalty. 6. The ld. AR has made two fold submissions while praying for cancelling the levy of penalty. The first submissions of the assessee is in respect of notice issued u/s. 274 r.w.s. 271(1)(c) of the Act. According to the assessee, the notice issued for levy of penalty does not clearly specify the charge for levy of penalty. A perusal of the assessment order shows that the Assessing Officer has recorded satisfaction for levy of penalty u/s. 271(1)(c) on account of concealment of particulars of income. However, while issuing notice u/s. 274, the Assessing Officer has not struck off irrelevant parts in the notice proforma and thus, the charges for levy of penalty in the notice shows concealment of particulars of income or furnishing inaccurate particulars of income. The Co-ordinate Bench of the Tribunal in the case of Kanhaiyalal D. Jain Vs. The Asstt. Commissioner of Income Tax (supra) has deleted the levy of penalty where irrelevant charges are not struck off from proforma notice. The rel....
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....f the Act was invalid and subsequent penalty proceedings were held to be vitiated." The Co-ordinate Bench further held : "23. However, the question which is raised before us by way of additional ground of appeal is root of start of the proceedings i.e. recording of satisfaction and the issue of notice, which has been challenged by the assessee to be invalid. Applying the ratio laid down by the Hon'ble Karnataka High Court in CIT & Anr. Vs. Manjunath Cotton and Ginning Factory (supra) and CIT Vs. SSA'S Emerald Meadows (supra) and in view of SLP being dismissed, we find merit in the plea of assessee that the satisfaction recorded in the present case to initiate penalty proceedings both for concealment of income and furnishing of particulars of income against additional income offered by the assessee is incorrect. Further, where the assessee is not aware of exact charge against him, the ambiguity in the notice issued under section 274 r.w.s. 271(1)(c) of the Act by not striking of portion which is not applicable, prejudice the right of reasonable opportunity to the assessee, as he was not made aware of exact charge he had to face. It is a clear-cut case of concealment since the asse....
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....ssee. A mere omission or negligence would not constitute a deliberate act of suppression very or suggestion falsi." 26. Where concealment of income and furnishing of inaccurate particulars of income are two different connotations, then as per provisions of the Act, the satisfaction has to be recorded by the Assessing Officer before initiating penalty proceedings as to under which limb the case of assessee falls. In the present set of facts, the satisfaction as recorded by the Assessing Officer which is evident from the assessment order itself does not establish the case of Revenue against the assessee that it is liable for levy of penalty for concealment under which limb i.e. for concealment of income or for furnishing of inaccurate particulars of income. The notice issued under section 274 of the Act by the Assessing Officer also does not show cause the assessee as to make him aware of exact charge levied against him. In the absence of same, it causes prejudice to the right of reasonable opportunity to be allowed to the assessee before levy of penalty under section 271(1)(c) of the Act. Consequently, penalty notice issued in the present case suffers from infirmities i.e. lack of....
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....ed in the assessment orders are relevant evidence to support the allegation of concealment, but these cannot be the foundation for holding the assessee guilty of concealment. Under section 68 as under section 69A no such legal fiction has been created to treat such additions as concealed income of the assessee for the purpose of penalty proceedings." The court further observed that the fiction created under sections 68, 69, 69A, 69B and 69C by itself cannot be extended to penalty proceedings to raise the presumption about concealment of such income. 9. In the present case, the deposits made in the bank account were not routed through cash book of the assessee. The entries are made in the bank passbook and there are no cash credit entries in the cash book of the assessee. Therefore, the addition made u/s. 68 is not sustainable. Once, the addition is held as not sustainable, there is no question of levy of penalty on such addition. 10. In respect of purchase of scooter the assessee has pointed that the payment for purchase of scooter has been made from ICICI Bank account. The assessee has substantiated his contentions by placing statement of Bank account at page 9 of the paper bo....