TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 1091
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....e Court in the case of MAK Data (P) Ltd (358 ITR 593), cited by the learned Commissioner of Income tax (Appeals) is in a different context and not at all applicable to the facts of the appellant's case". Ground No. 4 is general in nature. 3. The facts leading to the present appeal are that assessee has worked with a real estate company on salary basis and did commission agent work for three other companies and returned an income of Rs. 15,46,322/-. Assessee could not produce the books of account before the Assessing Officer (AO). AO proposed disallowance of Rs. 10,00,000/- which was accepted by assessee. On that, penalty proceedings were initiated and penalty of Rs. 3,36,601/- was levied by the AO. 4. Assessee contended before the Ld.CIT(A) "6.... that the AO did not make any finding that the expenses claimed to be false or bogus. It is not the case of the AO that the addition has been made on account of furnishing of inaccurate particulars of income by assessee. There was no satisfaction recorded by the Ld.AO that assessee has connected the particulars of his income or furnished inaccurate particulars. A mere mention at the end of the assessment order that 'penalty proceeding....
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....nus placed by the explanation has been discharged by the assessee, the onus shifts to revenue that amount in question constitute the income and not otherwise. 5.9 It was also held that the statute does not recognise these type of defences under the Explanation 1 to sec. 271(1)(c) of the Act. The law does not provide when an assessee makes a voluntary disclosure of his income he had to be absolved from penalty and in this case surrender of income is not voluntary as the assessee did not go on appeal and did not file any revised return before detection by the Assessing Officer. Hence, the penalty order of the Assessing Officer is confirmed and grounds of appeal are dismissed". 6. Assessee has raised the additional ground as under: "In the absence of specific charge raised by the Assessing Officer in the notice u/s. 274 r.w.s. 271(1)(c), the levy of penalty u/s. 271(1)(c) is not valid". Ld. Counsel has stated that this issue was contended before the Ld.CIT(A) in written submissions but was not adjudicated by Ld.CIT(A) hence raised an additional ground. Ld.DR has objected and submitted that the same should not be admitted. 6.1. Having considered the rival contentions, as asse....
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....wise, the principles of natural justice are offended, if the show cause notice is vague. On the basis of such proceedings, no penalty could be imposed on assessee. 7.3. Similar issue has come up in the case of M/s. Nivee Property Developers Private Ltd., Vs. ACIT in ITA No. 951/Hyd/2016 (AY. 2005-06) dt. 11-11-2016. In that case, the Co-ordinate Bench (SMC) of Hyderabad has held as under: "2. After hearing the rival contentions, we find that in the notice issued u/s 271(1)(c), the charge is not specified. In other words, the AO has not specifically stated whether the notice was issued for concealment of particulars of income or for furnishing inaccurate particulars of income. The Hon'ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton & Ginning Factory reported in (2013) 35 taxmann.com 250 (Kar.) at Para 63 held as under: "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) Wilful concealment is not an essential ingredient for attracting civil liability. (d) Exist....
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....s, 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 separate aspect of the proceedings. (u) The findings recorded in the assessment proceedings insofar as "concealment of income" and "furnishing of incorrect particulars" wou....
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....rizes them to initiate the penalty proceedings. Once a penalty proceedings is validly initiated, then under Section 274(1) an obligation is cast on the person initiating the proceedings to issue notice to the assessee. When such a notice is issued, it is open to the assessee to contest the accusation against him that he has concealed income or he has furnished inaccurate particulars. As there is an initial presumption of concealment, it is for the assessee to rebut the said presumption. The presumption found in Explanation 1 is a rebuttable presumption. If the authority, after hearing the assessee and looking into the material produced in the said proceedings before him is satisfied that though the income is undisclosed there was no intent to avoid tax and therefore, if he holds there is no concealment of income, then question of imposing penalty would not arise. It may be a case 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....
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....cused 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 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 inaccurate particulars of income. No doubt....
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....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 proforma without striking of the relevant clauses will lead to an inference as to nonapplication of mind." 5. In view of the facts of the case that there is no specific charge raised by the AO while issuing notice u/s 274 r. w. s. section 271 of the Act, as discussed above, the issue is covered by the decision of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (supra). Respectfully following the above, I allow the appeal of the assessee". 7.5. In the....