2017 (5) TMI 1209

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.... action of the Ld. CIT (A) in confirming the action of Ld. AO in framing the impugned penalty order which is beyond jurisdiction, illegal, in violation of principles of natural Justice, barred by limitation, contrary to the law and facts and deserves to be quashed. iii. That having regard to the facts and circumstances of the case, the Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. AO in levying the penalty under section 271 (1) (C) and in passing the impugned penalty order in as much as the assessment order passed under section 143 (3) dated 24/12/2009 is in violation of principles of natural Justice, beyond jurisdiction, barred by limitation, contrary to law and facts, unjustified, illegal and void ab initio. iv. That having regard to the facts and circumstances of the case, the Ld. CIT (A) has erred in law and on facts in not reversing the action of Ld. AO in levying the penalty and passing the impugned order that too without discharging his burden as envisaged under the law of proving concealment of income on furnishing inaccurate particulars by the assessee and by recoding incorrect facts and findings." 3. Briefly stated, the fac....

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....ide order dated 29/06/2010 levied a penalty of Rs. 556365/-. Assessee being aggrieved with the order of the Ld. assessing officer preferred an appeal before the Commissioner of income tax (appeals) who vide order dated 21/02/2011 dismissed the appeal of the assessee confirming the penalty levied by the Ld. assessing officer. Therefore, assessee aggrieved with that order has preferred appeal before us. 4. Before us, the Ld. authorized representative raised several arguments as under:- i. Assessee has surrendered sum of Rs. 15 Lacs vide letter dated 24/12/2009 with a pre-condition that no concealment penalty should be initiated against the company. ii. That explanation is offered by the assessee during the course of assessment proceedings, which was not found to be false, and therefore penalty cannot be levied. He further referred to the various bank statements of the assessee and its working submitted before the Ld. assessing officer. He referred to various pages of the paper book to demonstrate that none of the cash deposit was not accounted for in the books of account of the assessee. He referred to the cash book as well as the bank statement along with the re....

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....initiating penalty proceedings then penalty order cannot be said to be valid. x. He further referred and relied vehemently on the decision of CIT Vs. Manjunatha Cotton and Ginning factory (2013) 359 ITR 565. xi. He further referred to the decision of the coordinate bench in ITA No. 2555/MUM/2012 for assessment year 2008-09 in case of Meherjee Cashinath Holdings Private Limited Vs. ACIT dated 28/04/2017 wherein it is held that if one of the charges in the notice is not struck of the penalty order is unsustainable. xii. He further referred to the decision of coordinate bench in Tri-Star intach private limited versus ACIT 43 ITR (Trib) 279 to submit that explanation 1 to section 271 (1)(c) only applies to the concealment of income and not to the furnishing of inaccurate particulars. He submitted that assessing officer has invoked explanation 1 for levying penalty for furnishing inaccurate particulars of income, which is not in accordance with law. Based on the above decision he submitted that the penalty order passed by the Ld. assessing officer and confirmed by the Ld. first appellate authority is unsustainable in law and facts. 5. The Ld. depar....

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....d the order of assessment levying tax and interest and has paid tax and interest that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment order that, it is on account of such unearthing or enquiry concluded by the authorities it has resulted in payment of such tax or such tax liability came to be admit ted and if not it would have escaped from tax net and as opined by the Assessing Officer in the assessment order. l) Only when no explanation is offered or the explanation offered is found to be false or when the assessee fails to prove that the explanation offered is not bona fide, an order imposing penalty could be passed. m) If the explanation offered, even though not substantiated by the assessee, but is found to be bona fide 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 1(B) to section 271 of the Act should be clear and without any ambiguity. o) If the Assessing Officer has not recorded any satisfacti....

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....rusal of the penalty order it has been mentioned at page No. 6 of that order by the Ld. assessing officer that:- " Keeping in view the above facts and as a consequence of furnishing inaccurate particulars of income, I am of the view that assessee is liable for imposition of penalty under section 271(1)(C) of the IT act 1961. In this case the assessee has willfully and knowingly concealed an income of Rs. 1652904/- and as per explanation 1 to section 271(1)(C) the said amount is deemed to be the income on which tax was sought to be evaded." 8. Therefore, on reading of the penalty order also, it is apparent that the assessing officer was not sure whether it is a consequence of furnishing of inaccurate particulars of income or concealment of income. Therefore, on conjoint readings of assessment order, show cause notice and penalty order it is apparent that one cannot discern that charge on the assessee is whether furnishing inaccurate particulars of income or of concealment of income. It is an established principle that assessee should know the grounds which he has to meet specifically. Otherwise, the principles of natural justice is offended. On the basis of such proceedi....