TaxTMI 
TaxTMI 
2017 (1) TMI 1163
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....arch, a notice under section 153A was issued by the Assessing Officer and in response to which, the return of income was filed by the assessee on 31.10.2011 declaring total income of Rs. 40,63,220/- as against the income of Rs. 31,37,220/- declared in the return of income originally filed under section 139(1) on 20.03.2009. In the assessment completed under section 143(3) read with section 153A vide an order dated 27.12.2011, the total income of the assessee was determined by the Assessing Officer at Rs. 40,79,980/-. Penalty proceedings under section 271(1)(c) were also initiated by the Assessing Officer in respect of the difference between the income as finally assessed at Rs. 40,79,980/- and the income as originally offered by the assessee in the return of income filed under section 139(1) at Rs. 31,37,220/-. The explanation offered by the assessee in response to the show-cause notice issued by the Assessing Officer during the course of the penalty proceedings was not found acceptable by him and he proceeded to impose penalty of Rs. 3,20,444/- under section 271(1)(c) being 100% of the tax sought to be evaded by the assessee on the difference between the income as finally assessed....
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...., viz. "furnished inaccurate particulars of income" or "concealed particulars of such income" was not struck off by the Assessing Officer. Although the ld. D.R. has contended in this regard that the relevant portion in the penalty notice having been ticked by the Assessing Officer, it is clear that the other charge was not invoked by him and there was thus no infirmity in the notice issued by the Assessing Officer under section 274 as alleged by the ld. Counsel for the assesese, it is observed that the Coordinate Bench of this Tribunal in the case of Suvaprasanna Bhattacharya -vs.- ACIT (in 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 argume....
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....ither event, the person who is accused of the conditions mentioned in Section 271 should be made known about the grounds on which they intend imposing penalty on him as the Section 274 makes it clear that assessee has a right to contest such proceedings 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 in....
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....hing of inaccurate particulars. The Apex Court in the case of Ashok Pai reported in 292 ITR 11 at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case 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 con....
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....y ambiguity. o) If the Assessing Officer has not recorded any satisfaction or has not issued any direction to initiate penalty proceedings, in appeal, if the appellate authority records satisfaction, then the penalty proceedings have to be initiated by the appellate authority and not the Assessing Authority. p) Notice under Section 274 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 sep....