TaxTMI 
TaxTMI 
2016 (8) TMI 1224
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....proceedings the AO observed that the assessee claimed towards commission payment of Rs. 8,23,730/- in respect of six persons. Before the AO the assessee filed details of commission agents with their names and address. But the assessee has failed to produce them before the AO for verification of the same. However, the AO after considering the submissions of the assessee disallowed the sum of Rs. 3,97,030/- and added the same by treating it as bogus commission expenses, thereby he initiated penalty proceedings by issuing notice dt. 31-10- 2008 u/s.274 r.w.s 271(1) ( c) of the Act and imposed penalty of Rs. 1,21,491/- by an order dated 29-06-2011. Against which the assessee preferred an appeal before the CIT(A). The CIT-A found that the assessee was not able to produce any evidence in support of expenditure incurred towards commission payment in the assessment proceedings and held that such expenses are not genuine. Accordingly, he confirmed the penalty imposed by the AO. Aggrieved, the assessee is in appeal before us by raising the following grounds:- 1. For that the order of the learned Commissioner of Income Tax (Appeals) confirming the penalty imposed Rs. 1,21,491/- u/sec....
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....nning Factory, 359 ITR 565 (Karn), has held that notice u/s. 274 of the Act should specifically state as to whether penalty is being proposed to be imposed for concealment of income or for furnishing inaccurate particulars of income. Further submitted by the Ld.AR the aforesaid decision will squarely applicable to the present case and all the orders imposing penalty have to be held as bad in law and liable to be quashed. 5. As rightly pointed out by the Ld.AR, the Co-ordinate Bench of ITAT, Kolkata in the case of Suvaprasanna Bhattacharya supra by an order dated 06-11-2015 considered the Judgment of Hon'ble Karnataka High Court supra the relevant portion of which reproduced hereunder: 8. The next argument that the show cause notice u/s.274 of the Act which is in a printed form does not strike out as to whether the penalty is sought to be levied on the for "furnishing inaccurate particulars of income" or "concealing particulars of such income". On this aspect we find that in the show cause notice u/s.274 of the Act the AO has not struck out the irrelevant part. It is therefore not spelt out as to whether the penalty proceedings are sought to be levied for "furnishing ina....
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....a printed farm 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, 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 ....
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....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 pro forma without striking of the relevant clauses will lead to an inference as to non-application of mind." The final conclusion of the Hon'ble Court was as follows:- "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) Willful 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 condition....
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....or 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 in so far 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. ....