AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 514
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....re identical we have taken up all the appeals together for hearing and dispose of the same by this consolidated order. 2. The only issue to be decided in all these appeals is as to whether the penalty u/s 271(1)(c) of the Act could be levied in respect of income offered after the search but in the return filed u/s 153A of the Act. 3. The brief facts of this issue is that a search and seizure operation was conducted on 24.1.2008 u/s 132 of the Act at the residence of the assessee at 3rd floor, New India Assurance Co Ltd Building, G.S.Road, Guwahati on 24.1.2008 besides conducting search in various factory and residential premises of the group. Besides a search and seizure operation was conducted at Locker No. 26 of HDFC Bank, Bhangagarh, Guwahati and some jewelleries were found. In the course of search, the assessee was found to be in possession of undisclosed income. Consequent upon search and seizure operation, the jurisdiction of the case was transferred. Thereafter proceedings u/s 153A of the Act were initiated and returns filed accordingly. The assessee pleaded that pursuant to the order passed by the ld CIT, Dhanbad u/s 127 of the Act , the seized materials were transferred ....
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....asst years under appeal by pointing out that the ld AO had merely made a tick mark on the said notice without mentioning the specific charge of offence committed by the assessee i.e. whether he had concealed the particulars of income or furnished inaccurate particulars of income. When the specific charge of offence is not mentioned, no penalty u/s 271(1)(c ) of the Act could be levied, in support of which he placed reliance on the decision of the Hon'ble Karnataka High Court in the case of CIT vs Manjunatha Cotton and Ginning Factory reported in (2013) 359 ITR 565 (Kar). He also placed on record a copy of the decision of the Hon'ble Supreme Court on the said issue in the case of CIT & Anr vs M/s SSA'S Emerald Meadows in CC No. 11485/2016 dated 5.8.2016. He argued that this appeal to Hon'ble Apex Court had emanated against the order passed by the Hon'ble Karnataka High Court which placed reliance on its earlier decision in the case of CIT vs Manjunatha Cotton and Ginning Factory reported in (2013) 359 ITR 565 (Kar). He argued that hence the ratio laid down by the Hon'ble Karnataka High Court in 359 ITR 565 (supra) had been approved and upheld by the Hon'ble Supreme Court in the case....
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....at a decision, i.e., a final conclusion only after hearing the assessee; (iv) at the stage of initiation of penalty proceeding the order passed by the AO need not reflect satisfaction vis-a-vis each and every item of addition or disallowance if overall sense gathered from the order is that a further prognosis is called for; (v) however, this would not debar an assessee from furnishing evidence to rebut the 'prima facie' satisfaction of the AO; since penalty proceeding are not a continuation of assessment proceedings; (vi) due compliance would be required to be made in respect of the provisions of ss. 274 and 275; (vii) the proceedings for initiation of penalty proceeding cannot be set aside only on the ground that the assessment order states 'penalty proceedings are initiated separately' if otherwise, it conforms to the parameters set out hereinabove are met. The prayers made in the writ petitions are thus rejected with the caveat that provisions of s. 271(1)(c) post-amendment will be read in the manner indicated above." 6.1. We find that the co-ordinate bench of this tribunal in the case of Harish Kumar Sarawgi vs DCIT vide order dated 26.8.2016 supra had held as under :- 5.5.....
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....thority categorically records a finding regarding the existence of any said grounds mentioned therein and then penalty proceedings is initiated, in the notice to be issued under Section 274, they could conveniently refer to the said order which contains the satisfaction of the authority which has passed the order. However, if the existence of the conditions could not be discerned from the said order and if it is a case of relying on deeming provision contained in Explanation-1 or in Explanation-1(B), then though penalty proceedings are in the nature of civil liability, in fact, it is penal in nature. In either 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 form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law ....
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....cts subsequent to the imposition of penalty cannot validate the order of penalty which, when passed, was not sustainable. 61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing 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 be....
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....ered 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, 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 ground....