2017 (2) TMI 497

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....the Act . The grounds of appeal read as follows:- (1) For that the penalty orders u/s 271(1)(c) of the I.T. Act, 1961 is void-ab-initio. The ld. AO had not recorded the reasons specifically while initiating it in assessment order. Therefore, the penalty is liable to be deleted. (2) For that the assessee during assessment proceeding accepted the addition made and as per the order u/s 143(3) of the Act agreed to pay the assessed tax of Rs. 19,35,458/- . The levy of the penalty u/s 271(1)(c) of the Act is unjustified and against the direction of the Hon'ble Supreme Court as in Sri Shadi lal Sugar & general Mills Ltd. -vs. - CIT 168 ITR 705. (3) For that the penalty on agreed addition is illegal , so the penalty u/s 271(1)(c) of the Act of....

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....L/2010 order dated 06.11.2015, where the decision of the Hon'ble Karnataka High Court in the case of CIT -vs. - Manjunatha Cotton & Ginning Factory (2013) 218 Taxman 423 (Kar.) was followed. In this judgment at para 63, the Hon'ble Karnataka High Court has held as follows: - "(a) Penalty under Section 271(l)(c) is a civil liability. (b) Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. (c) Wilful concealment is not an essential ingredient for attracting civil liability. (d) Existence of conditions stipulated in Section 271(l)(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 Assessm....

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....tion is offered or the explanation offered is found to be false or when the assessee fails to prove that the explanation offered is not bonafide, an order imposing penalty could be passed. (m) If the explanation offered, even though not substantiated by the assessee, but is found to be bonafide and all facts relating to the same and material to the computation of his total income have been disclosed by him, no penalty could be imposed. (n) The direction referred to in Explanation IB to Section 271 of the Act should be clear and without any 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,....

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..... (Emphasis ours). 3. The Hon'ble Supreme Court has dismissed the SLP filed by the Revenue against this decision. The Hon'ble Supreme Court in the case of Commissioner of Income Tax & Anr. -vs. - M/s. SSA's Emerald Meadows, Bangalore North Taluk in ITA No. 380 of 2015 dated 23.11.2015 has held as follows: - "3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under section 274 read with sect ion 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act ') to be bad in law as it did not specify which limb of sect ion 271(1)(c) of the Act, the penalty proceedings had been initiated, i .e. , whether for concealment of particulars of income or furnishing of inaccurate particulars of....