TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 1676
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....ried out at the residence of the assessee on 14.3.2012, during the course of which income of Rs. 28 lacs was surrendered. Thereafter return was filed by the assessee in response to notice u/s 153A declaring income of Rs. 37,30,744/- which included the surrendered income of Rs. 28 lacs. Subsequently during assessment proceedings the AO noted that during the year under consideration the assessee had purchased two plots measuring 270 sq.yd. each situated at Moja Barewal Awaria, Ashapuri, Ludhiana for Rs. 27,27,600/-. On being confronted with the same the assessee explained the source of investment as being out of the surrendered income of Rs. 28 lacs. The Assessing Officer noted that the surrender was made after detection of concealment by the Department by way of search u/s 132 of the Act and therefore initiated penalty proceedings on the same u/s 271(1)(c) of the Act. 3. During the course of penalty proceedings the assessee contended that the entire surrendered income had been disclosed in the return of income filed and no amount had been added or disallowed while computing total income of the year, therefore no penalty u/s 271(1)(c) of the Act was leviable. The Assessing Officer r....
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....ng the ratio of the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT (1988) 229 ITR 383 (SC), the additional grounds raised before us deserve to be admitted for adjudication since they involve point of law and do not require any further or fresh investigation of facts. Moreover, since the grounds raised relate to the jurisdiction of the Assessing Officer to impose penalty u/s 271(1)(c) of the Act, they are relevant to determine the liability of the assessee for penalty u/s 271(1)(c) of the Act. Accordingly, the grounds are admitted for adjudication. 10. We shall first deal with the additional grounds raised since they challenge the jurisdiction to pass the penalty order. 11. In the context of the additional grounds raised, the Ld. counsel for assessee contended that the penalty notice issued u/s 274 read with section 271(1)(c) of the Act, dated 29.11.2013 was invalid and bad since it was issued in standard proforma and the irrelevant portions of the notice had not been struck off. The Ld. counsel for assessee contended that this was a legal infirmity fatal to the imposition of penalty because in the absence of specifying the g....
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....ice u/s 274 must specifically spell out the charge fixed on the assessee for the purpose of levy of penalty whether concealment or furnishing of inaccurate particulars of income by striking out the irrelevant clause in the notice. Para 59 of the order deals with the same and is being reproduced hereunder for reference: "NOTICE UNDER SECTION 274 59. As the provision stands, the penalty proceedings can be initiated on various ground set out therein. If the order passed by the Authority categorically records a finding regarding the existence of any said grounds mentioned therein and then penalty proceedings is initiated, in the notice to be issued under Section 274, they could conveniently refer to the said order which contains the satisfaction of the authority which has passed the order. However, if the existence of the 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 ....
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....e proceedings are initiated on one ground, the penalty should also be imposed on the same ground. Where the basis of the initiation of penalty proceedings is not identical with the ground on which the penalty was imposed, the imposition of penalty is not valid. The validity of the order of penalty must be determined with reference to the information, facts and materials in the hands of the authority imposing the penalty at the time the order was passed and further discovery of facts subsequent to the imposition of penalty cannot validate the order of penalty which, when passed, was not sustainable. 61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total 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 Ashok Pai reported in 292 ITR 11 at page 19 has held th....
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....s explained that the proceedings being penal in nature the assessee should be made aware of the grounds on which penalty is being levied so that he can adequately defend himself. The crux of the judgment therefore is that the notice u/s 274 should clearly bring out the charge against the person who is being penalized either by referring to the assessment order where the AO has clearly recorded his satisfaction of the existence of ground warranting levy of penalty or where the same is absent ,by way of striking off the irrelevant ground which finds mention in the standard performa used by the Revenue while issuing notice u/s 274 of the Act. At this juncture, it is relevant to point out that the penalty u/s 271(1)(c) of the Act is levied for concealing and/or for furnishing inaccurate particulars of income. The Hon'ble High Court has clarified that there may be circumstances whether the charges are overlapping and both the conditions exist. The facts, therefore, should clearly point out the existence on either or both the grounds as is applicable in each cases. 15. Having said so we shall proceed to apply the aforesaid ratio to the facts of the present case. The notice issued to....
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....g Officer. It is not the case of the assessee that due opportunity was not given to the assessee. Under the aforesaid circumstances we find that there is no violation of the principles of natural justice in the present case when the assessee having been aware of the specific charge for which penalty was initiated and also having been given due opportunity to defend himself from the said charge. We, therefore, cannot agree with the contention of the Ld. counsel for assessee that the notice issued to it u/s 274 of the Act suffered from infirmity. Moreover, we find that the decisions relied upon by the Ld. counsel for assessee are of no assistance since they are all distinguishable on facts as in all the said cases the ground on account of which penalty was initiated was not clear with the notice being in a standard format mentioning both the charges alternatively without striking of the incorrect charge which is different from the facts of the present case. In view of the above, we dismiss the additional ground of appeal raised by the assessee. 16. Now coming to the ground raised challenging the levy of penalty as per Explanation 5A to section 271(1)(c) of the Act, before us the Ld.....
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....een furnished before the said date but such income has not been declared therein: or (b) the due date for filing the return of income for such previous year has expired but the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income]" A plain reading of the above explanation shows that if the income declared by the assessee after search, in response to notice u/s 153A, which was not declared by the assessee earlier for any previous year which has ended before the date of search, then the assessee shall be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. The undisputed fact in this case are that the income declared for the year under consideration in the return filed in response to notice u/s 153A (after the search) was more than the income declared in the return filed u/s 139 before the search i.e. the sur....
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....the CIT(Appeals) has acted in accordance with the currently operative and relevant penal provisions, with reference to the return of income, filed in response to Section 153A of the Act. 31. In view of the above legal and factual discussions, and having regard to the express statutory provisions of Section 271(1) (c) of the Act read with Explanation 5A there under, as inserted by the Finance. (No. 2) Act, 2009, with retrospective effect from 01.06.2007, we do not find any infirmity, in the findings of ld CIT(Appeals). Therefore, the findings of the CIT(Appeals) are upheld and, consequently, the grounds of appeal of the assesses are dismissed. 32. In the result appeal of the assessee is dismissed. " In the present case the provisions of Explanation-5A to Section 271(l)(c) are attracted. During the appellate proceedings, the main argument of the AR was that no incriminating document was found and the income returned in response to notice u/s!53A has been accepted. However, perusal of the assessment order shows that the additional income has been declared by the assessee after the search. The extra income offered/assessed u/s 153A represent concealed income which was not declare....
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....(c) was applicable. Ld.Counsel for the assessee has made no arguments challenging this finding of the CIT(A). 22. Further we find no infirmity in the interpretation of the Ld.CIT(A) of Explanation 5A to section 271(1)(c) since the language of Explanation 5A is very clear and unambiguous, that the assessee will be deemed to have concealed particulars of his income vis a vis income declared in the return filed in response to notice u/s 153A after search, which was not declared in the original return of income filed. Therefore, we hold, that the Ld.CIT(A) has rightly dismissed the contention of the assessee that where income returned u/s 153A is accepted no penalty is leviable. Ld.CIT(A) has, we find, distinguished the case laws relied upon by the assessee in support of its aforesaid contention, as not having been rendered in the context of Explanation 5A to section 271(1)(c) and hence not applicable in the facts of the present case. Ld Counsel for the assessee was unable to controvert this. Therefore we find no reason to interfere in this finding of the CIT(A) also. 23. As for the contention of the assessee that the Explanation-5A to section 271(1)(c) of the Act is attracted only w....