TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 482
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.... in response thereto the assessee filed the return of income declaring total income of Rs. 77,52,300/-. The Assessing Officer noted that assessee had originally filed the return of income declaring total income of Rs. 2,52,300/-. However, in response to notice issued under section 153A of the Act, the assessee has disclosed additional income of Rs. 75 lakhs. Since the additional income of Rs. 75 lakhs was offered for taxation after the search action, as per the Assessing Officer, penalty proceedings under section 274 r.w.s. 271(1)(c) of the Act were separately initiated. The assessee during the course of search had disclosed business activities run under the name of M/s. Anand Trading Company. The assessee had declared additional income @1.50% on the estimated turnover against the cash deposits in the bank accounts, i.e. Solapur Janata Sahakari Bank and Janta Sahakari Bank Ltd., (of M/s.Anand Trading Company) Pune Branches at Latur. The assessee was asked to furnish the details of cash deposits in the various bank accounts and in reply thereto the assessee furnished year-wise bank credits, which details are placed at page 3 of the assessment order. The assessee also furnished yearw....
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....ings 271(1)(c) of the Act is necessary. Consequently he directed the issue of notice under section 274 r.w.s. 271(1)(c) of the Act. However, while levying the penalty, the Assessing Officer was satisfied that assessee had filed inaccurate particulars of income and further satisfied that the assessee has concealed his income and has rendered himself liable for penalty under section 271(1)(c) of the Act. The Assessing Officer in the final analysis had held the assessee to have concealed his income and also filed inaccurate particulars of income. In other words, the assessee was held to be liable for levy of penalty for the additional income of Rs. 75 lakhs on both the limbs of section 271(1)(c) of the Act. 6. There is no merit in the penalty order passed by the Assessing Officer in this regard wherein he has not come to a conclusion as to which limb of section 271(1)(c) has been fulfilled by the assessee. In any case, in the satisfaction recorded by the Assessing Officer, while initiating the penalty proceedings, he was satisfied that the assessee has furnished inaccurate particulars of income whereas this is a case of search wherein certain income was not offered to tax, hence at b....
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....n fixation of charge, levy the penalty for such act of concealing the particulars of income. Similarly, in cases where the assessee concerned had furnished inaccurate particulars of such income, then similar exercise has to be carried out by the concerned Officer. 14. The first stage of invocation of provisions of section 271(1)(c) of the Act is the satisfaction to be recorded by the Assessing Officer, which admittedly, has to be during the course of assessment proceedings. So, where the assessment proceedings are pending, then the Assessing Officer has to apply his mind and on being satisfied, he has to give a finding that the assessee before him has either concealed the particulars of income or furnished inaccurate particulars of income in respect of the issue before him. Thereafter, the notice should be issued to such person by the concerned Officer, wherein it should be clear that the assessee has to justify its case either for concealment of income or furnishing of inaccurate particulars of income. There may be cases where there is issue of both concealment of income and furnishing of inaccurate particulars of income, based on the nature of additions, then in such cases, sa....
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....ds 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, 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 ....
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....application of mind." 15. The Hon'ble Karnataka High Court has laid down the proposition that the Assessing Officer is to be satisfied in the course of proceedings that there is either concealment of income or furnishing of inaccurate particulars of income under clause (c) to section 271(1) of the Act. It has been categorically held that concealment of income and furnishing of inaccurate particulars of income are different. The Hon'ble High Court has thus, laid down that the Assessing Officer while issuing notice has to come to conclusion that whether it is case of concealment of income or case of furnishing of inaccurate particulars of income. The reliance in this regard was placed on the ratio laid down by the Hon'ble Supreme Court in T. Ashok Pai Vs. CIT (2007) 292 ITR 11 (SC), wherein at page 19 it was held that concealment of income and furnishing inaccurate particulars of income carry different connotation. Applying the said proposition, it was held that where the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similarly, for furnishing inaccurate particulars of income, the standard proforma without str....
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....of natural justice and the defect in such notice could not be overlooked. Similar proposition has further been laid down in other decisions of various Benches of Tribunal which have been relied upon by the assessee before us. 20. The learned Departmental Representative for the Revenue placed heavy reliance on the ratio laid down by the Hon'ble Bombay High Court in CIT Vs. Smt. Kaushalya (supra). In the facts of the case before the Hon'ble Bombay High Court, the Hon'ble High Court quashed the penalty levied for assessment year 1967-68 as the same was imposed without affording reasonable opportunity of hearing to the assessee. In respect of other two years where there was non-striking of inaccurate portion, the Hon'ble High Court held that the same would not invalidate the notice issued under section 274 of the Act. It was further held that the assessment orders were also made and reasons for issuing notice under section 274 r.w.s. 271(1)(c) of the Act were recorded by the Assessing Officer and since the assessee fully knew in detail the exact charge of Department against him, it could not be said that either there was non-application of mind by the ITO or so-called ambiguity word....
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....issued under section 153A of the Act for various years, different entities filed the return of income for the respective years and cumulatively for Rs. 13.99 crores as additional income. The income was declared on account of on-money on sale of plots, which was detected from the documents seized during the course of search. Admittedly, Explanation 5A to section 271(1)(c) of the Act is attracted in such cases. However, the case of assessee before us is that the Assessing Officer while completing the assessment proceedings had to be satisfied that the assessee had either concealed the income or furnished inaccurate particulars of income and is liable to levy of penalty under section 271(1)(c) r.w.s. Explanation 5A of the Act. The notice is to be issued to the assessee under section 274 of the Act. Before issuing such notice, satisfaction has to come out from the proceedings going on before the Assessing Officer. The perusal of assessment order passed in the present case reflects that the Assessing Officer while initiating proceedings has recorded satisfaction as to the assessee has furnished inaccurate particulars of income and has also concealed the income. The only source of additi....
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....ut, in present case, in the assessment order itself while recording satisfaction for initiating proceedings under section 271(1)(c) of the Act, exact charge of the Department against the assessee is not clear. The Assessing Officer records the satisfaction for initiating penalty proceedings on both the counts i.e. concealment of income and furnishing of inaccurate particulars of income. The Hon'ble Bombay High Court had also upheld the quashing of penalty proceedings for assessment year 1967-68 to be justified on account of vagueness and ambiguity in the notice issued. But the Hon'ble High Court further held that where the assessee was fully aware of exact charge of the Department against him, then technical non-striking of certain terms in the notice would not invalidate the proceedings. Where there is default in the first stage of making the assessee aware of exact charge of the Department, then initiation of penalty proceedings are vitiated and the same are to be quashed. The issue of notice under section 274 of the Act on such vagueness and ambiguity makes such notice invalid and proceedings thereafter are to be quashed. 25. The Hon'ble Supreme Court in T. Ashok Pai Vs. CIT ....