TaxTMI 
TaxTMI 
2017 (2) TMI 807
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....nt of assessee for giving cheques/demand drafts to AP Beverages Corporation Ltd. Considering the submissions of assessee, the matter was set aside to the file of AO to examine the affidavits, along with other evidence and in the course of re-assessment proceedings, AO has accepted all the amounts, except two deposits. It is noticed that cash deposits amounting to Rs. 3,07,500/- in the Development Credit Bank a/c and Rs. 4,31,000/- in the Oriental Bank of Commerce a/c were not reflected in the Books of the above two concerns. Accordingly, an amount of Rs. 7,38,500/- was confirmed in the reassessment orders which assessee has accepted without any further appeal. Since proceedings u/s. 271(1)(c) were initiated, AO levied the penalty. 3. Before the Ld.CIT(A), it was contended that the addition was an agreed addition in order to buy peace, even though the monies belong to the other concerns and relied on various case law such as; i. Sandur Manganese & Iron [38 taxmann.com 106]; ii. CIT Vs. Steel Centre [51 taxmann.com 127]; iii. Rama Educational Welfare Society [44 taxmann.com 32]; iv. Vikaram Bhatia [47 Taxmannn.com 365] (ITAT, Lucknow) 4. Ld.CIT(A) however, in a very bri....
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.... examination. In the course of re-assessment, AO has examined and brought to tax the amount of Rs. 7,38,500/- stating as under: "2. The assessee furnished copies of the affidavits filed before the ITAT along with the books of account of Laxmi Wines and Mallikarjuna Bar & Restaurant. During the assessment proceedings, it is noticed that there are cash deposits in the SBH Account of the assessee also which were not explained at the time of original assessment. The assessee submitted that they also represent the sales of both the above Accounts that immediately after deposit of the cash a Banker's Cheque has been taken. The books of account furnished have been verified. It is noticed that cash deposits amounting to Rs. 3,07,500/- in the Development Credit Bank Account of the assessee and Rs. 4,31,000/- in the Oriental Bank of Commerce Account of the assessee were not reflected in the books of the above two concerns. Hence, the amount totaling to Rs. 7,38,500/- is treated as Unexplained Income of the assessee.". 8. Thus, as can be seen from the above order, the reason for adding the amounts in the hands of assessee is only because the AO did not find necessary entries in the books ....
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....bove, 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) Wilful concealment is not an essential ingredient for attracting civil liability. (d) Existence of conditions stipulated in Section 271(1)(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 Assessment Order or order of the Appellate Authority or Revisional Authority. (f) Even if there is no specific finding regarding the existence of the conditions mentioned in Section 271(1)(c), at least the facts set out in Explanation 1(A) & (B) it should be discernible from the said order which would by a legal fiction constitute concealment because of deeming provision. (g) Even if these conditions do not exist in the assessment order passed, at least, a direction to initiate proceedings under Section 271(1)(c) is a sine qua non for the Assessment Officer to initiate the proceedings because of the deeming provision contained in Section 1(B). (h) The said deeming provisions are....
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....sessment proceedings. The proceedings for imposition of penalty though emanate from proceedings of assessment, it is independent and separate aspect of the proceedings. (u) The findings recorded in the assessment proceedings insofar as "concealment of income" and "furnishing of incorrect particulars" would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings". Respectfully following the same, I quash the penalty levied u/s 271(1)(c) as bad in law". 11. Similarly in the case of Lalitkumar M Sakhala Vs. DCIT in ITA No. 938/Mum/2015 (AY. 2009-10) dt. 10-08-2016, the Co-ordinate Bench of Mumbai (SMC) has held as under: "4. Before me, the ld. counsel for the assessee stated that he has filed the explanation before the AO and the CIT(A) and also argued that in this case the AO has levied penalty for concealment u/s 271 (1) (c) of the Act, but without any specific charge i.....
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....ase of not disclosing income without any intent to avoid tax; it may be a case of furnishing particulars without any intention to avoiding tax. Both stand on the same footing. It is only when the authority is satisfied that non-disclosure of income or furnishing inaccurate particulars was with the intention of evading tax, then it amount to concealment, it amounts to furnishing inaccurate particulars. Then, at his discretion, he may impose penalty as provided under the Act. Therefore, merely because the assessee accepted addition or deletion and did not challenge the assessment order by way of appeal, it cannot be concluded that such addition or deletion amounts to concealment of income or furnishing of inaccurate particulars. When a plea is taken that in order to avoid litigation and purchase peace, the tax levied is paid with interest, if the assessee is able to demonstrate his bona fides and if the authority is satisfied about his bonafides, then the question of imposing penalty would not arise. Similarly, in cases where though the tax was not actually due but still the assessee pays tax with a hope of claiming deductions in the subsequent years, if the assessee is able to demon....
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.... 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 claim, if at all, penalty is to be imposed, it should be imposed only on the gr....