TaxTMI 
TaxTMI 
2018 (5) TMI 59
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....s. 52,83,477/- u/s 271(1)(c) where Ld AO has failed to mention the specific limb in which penalty is initiated and Ld CIT-A has incorrectly decided the said issue in para 5.3.5, 5.3.5.2, without considering the cited precedents in this regard. 3. That on the facts and in the circumstances of case and in law, the Ld CIT-A erred in not deleting the penalty amounting to Rs. 52,83,477/- u/s 271(1)(c) where assessee made complete factual disclosure in accounts and returns etc and same is sufficient to knock off the extant penalty and Ld CIT-A has incorrectly decided the said issue in para 5.3.5.3 on basis of extraneous reasoning. Other Grounds on Merits 4. That on the facts and in the circumstances of case and in law, the Ld CIT-A erred in not deleting the penalty amounting to Rs. 52,83,477/- u/s 271 (1) (c) by proceeding on totally incorrect hypothesis that u/s 271 (1) (c) there are three limbs of penalty as opined by her in para 5.3 of impugned order which vitiates the entire penalty. That is, Ld CIT-A incorrectly treated explanation 10 sec. 271(l)(c) as extended definition of penalty which nullifies the entire penalty. 5. That on the facts and in the circumstances of case and....
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....so not in dispute that the quantum has been accepted by the assessee company. 6. In the backdrop of the aforesaid facts and circumstances of the case, order passed by the lower Revenue authorities and arguments addressed by the ld. AR to the parties, the sole question arises for determination in this case is:- "as to whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income during assessment proceedings while interpreting the provisions contained u/s 271(1)(c) of the Act?" 7. The ld. AR for the assessee company challenging the impugned order contended that show-cause notice issued by the AO u/s 274, available at page 4 of the paper book is not a valid notice to initiate the penalty proceedings as the assessee company has not been made aware if it has concealed the particulars of income or has furnished inaccurate particulars of such income and relied upon the decision rendered by the Hon'ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory & Ors. 359 ITR 565 (Karn.). 8. However, ld. DR for the Revenue to repel the arguments addressed by the ld. AR for the assessee company contended inter alia that th....
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....se of CIT vs. Manjunatha Cotton and Ginning Factory & Ors. (supra) dealt with the identical issue threadbare and came to the following conclusion :- "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) Ever 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(l)....
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.... 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. The assessment or reassessment cannot be declared as invalid in the penalty proceedings." 12. So, following the law laid down by Hon'ble High Court, we are of the considered view that when the assessee has not been specifically made aware of the charges leveled against him as to whether there is a concealment of income or furnishing of inaccurate particulars of income on his part, the penalty u/s 271(1)(c) of the Act is not sustainable. The case law relied up....
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....en accepted it would not per se tantamount to furnishing any account of inaccurate particulars to attract the penalty proceedings u/s 271(1)(c). Operative part of the aforesaid judgment is extracted as under :- "Held; dismissing the appeal, that the assessee had filed the return and furnished all particulars. The assessee had explained during the penalty proceedings that the investments were written off in the books of account and were claimed as deduction on account of loss which occurred to the assessee in the computation of total income. The Tribunal analysing the facts had expressed the view that there had been no furnishing of inaccurate particulars of such income and the assessee had declared the entire material. It was a case where a claim put forth by the assessee as regards the loss was not accepted but that would not per se tantamount to furnishing any kind of inaccurate particulars. Thus, there had been no concealment of income or furnishing of inaccurate particulars. Hence, the cancellation of penalty was valid." 16. Similarly, Hon'ble High Court of Delhi in case cited as CIT vs. DCM Limited - 359 ITR 102 held as under :- "Law does not bar or prohibit an assessee f....