AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 1319
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....sions of sec. 153A of the Income Tax Act, 1961. (iii) That the penalty has been imposed without recording proper satisfaction and application of mind. 2. That even otherwise, mere addition or disallowance could not be the basis for concealment as all the particulars relating to the additions and disallowance were part of record and as such there is not case of concealment/furnishing of inaccurate particulars of income. 3. That the penalty order is not justified on facts and same is bad in law. 4. That appellant craves to add, alter, amend and delete any of the grounds of appeal before or at the time of hearing." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are:- Assessment has been completed u/s 143(3)/153A of the Income Tax Act, 1961 (for short the 'Act') at the total income of Rs. 82,73,324/- as against the returned income of Rs. 32,52,687/-, by making three additions of Rs. 5,50,000/-, Rs. 42,40,549/-, Rs. 10,66,846/- and Rs. 8,36,758/-, on account of unexplained income of the assessee, disallowance of expenditure claimed by the assessee for making payment of various Jal Board Official for getting favours /contracts, on account ....
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....articulars of income or has furnished inaccurate particulars of income," in the show-cause notice issued under section 271(1)(c)/274 of the Act and relied upon the decision of Hon'ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory-359ITR 565 and CIT vs. SSA's Emerala Meadows -73 taxmann.com 241 (kar.) (Revenue's SLP dismissed in 242 taxman 180) 8. However, Ld. DR for the Revenue to repel the arguments addressed by the Ld. AR for the assessee company contended inter alia that the notice issued by the AO u/s 274 of the Act is not standalone document which is based on assessment order; that the notice has been issued in respect of furnishing inaccurate particulars of income and relied upon the case of Trimurti Engineering Works - 25 taxmann.com 363. 9. In order to proceed further, we would like to peruse the notice issued by AO u/s 274 read with section 271(1)(c) of the Act to initiate the penalty proceedings which is extracted as under for ready perusal:- "NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(c) OF THE INCOME TAX ACT, 1961. Income tax Office Central Circle Dated: 29.12.2009 To, M/s Kaveri Infrastructure Pvt. Ltd. B-14, Gr....
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.... conditions could not be discerned from the said order and if it is a case of relying on deeming provision contained in Explanation 1 or in Explanation 1 (B), then though penalty proceedings are in the nature of civil liability, in fact, it is penal in nature. In either event, the person who is accused 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 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 na....
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.... income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of T Ashok Poi v. CIT [2007] 292 ITR 11 /161 Taxman 340 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 CIT v. Manu Engg. [1980] 122 ITR 306 and the Delhi High Court in the case of CIT v. Virgo Marketing (P) Ltd. [2008] 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 non-application of mind. " 12. Hon'ble Apex Court in case of CIT vs. SSA's Emerala Meadows....
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....sallowances have been deleted/remanded back to AO, penalty levied u/s 271(1)(c) is not sustainable. Even penalty levied on the assessee in AY 2005-06, 2006-07 & 2007-08 on the identical ground, which were part of the block assessment, has been deleted by the Tribunal vide order dated 04.04.2018. 15. More so, when additions/disallowances have been merely made on the basis of 'change of opinion', the penalty levied by the AO and confirmed by Ld. CIT(A) is not sustainable in the eyes of law. 16. Furthermore, the Ld. AR for the assessee contended that when the assessee has made a bonafide claim no penalty can be levied. When it is not the case of the Revenue that the Assessee has concealed particulars of income or has furnished inaccurate particulars of income rather declined the bonafide claim set out by the assessee, penalty cannot be levied. Reliance in this regard may be placed on judgment cited as CIT vs. Reliance Petro Products Pvt. Ltd. 322 ITR 158 (S.C.). Operative part of which is reproduced for ready reference as under:- "A glance at the provisions of section 271(l)(c) of the I.T. Act, 1961 suggests that in order to be covered by it, there has to be concealment of the par....