TaxTMI 
TaxTMI 
2019 (4) TMI 197
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....lars of income. Thereafter the penalty was levied by holding that the assessee had furnished the inaccurate particulars of income. Therefore, the initiation and imposing of penalty proceedings is wrong, bad in law, in valid and void ab initio. The notice u/s 271 should be specific on imposing of penalty u/s 271(1)(c) of Income Tax Act, 1961 i.e. concealed particulars of income or furnishing inaccurate particulars of income. In this regard the reliance is placed on the following decisions: - i) Hon'ble Karnataka High Court in the case of CIT & others Vs M/s SSA'S EMERALD MEADOWS reported in 2015 (11) TMI 1620 -, wherein Hon'ble Court has held that:- "3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Asses sing Officer under Section 274 read with Section 271(1)( c) of the Income Tax Act, 1961 (for short 'the Act') to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decisio....
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.... tax liability is admitted is not automatic. k) Even if the assessee has not challenged 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 authorities it has resulted in payment of such tax or such tax liability came to be admitted 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 bonafide, an order imposing penalty could be passed. m) If the explanation offered, even though not substantiated by the assessee, but is found to be bonafide 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 1B to Section 271 of the Act should be clear and witho....
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....6 as placed on the record. It is clear from the notice so issued that the Assessing Officer had levied charge of concealed the particulars of income or furnished inaccurate particulars of such income. In view of the judicial pronouncements discussed hereinbelow, the notice issued under section 274, read with Section 271 (1) (c) of the Income Tax Act, 1961, should specify under which limb of Section 271 (1) (c) of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. In the absence of which no penalty should be levied on the assessee as determination of such limb is sine qua non for imposition of penalty under section 271 (1) (c) of the Act. 16. There can be no doubt that penalty u/s. 271(1)(c) of the Act is leviedforconcealingparticularsofincomeorforfurnishinginaccuratepartic ulars of such Income, which are the two limbs of this provision. In other words, it is only when the authority invested with the requisite power is satisfied that either of the two events existed in a particular case that proceedings u/s. 271(1)(c) of the Act are initiated. This pre-requisite should ....
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....court in the case of Ashok Pai reported in [2007] 292 ITR 11 (SC) 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 Manu Engineering Works reported in [1980] 122 ITR 306 (GUJ) and the Delhi High Court in the case of CIT v. Virgo Marketing P Ltd reported in [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. "(p) Notice under section 274 of the Act should specifically state the grounds mentioned in section 271(1)(c) i.e. whether it is for concealment of income or for furnishing of incorrect particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind 19. Thereafter, in so far as the manner in which the statutory notice was required to be issued, the Hon'ble C....
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.... Bench of this Court rendered in the case of Commissioner of Income-tax vs. Manjunatha Cotton And Ginning Factory (2013) 359 ITR 565. 4. In our view since the matter is covered by judgment of the Division Bench of this Court we are of the opinion no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed." 23. The SLP filed by the department in the aforesaid case also was dismissed by the Hon'ble Supreme Court vide Petition for Special Leave to Appeal (C) No .... ./2016 (CC No. 11485/2016) dated05.08.2016. 24. The Hon'ble Bombay High Court in the case of CIT v. Shri Samson Perinchery [Income Tax Appeal No. 1154 of 2014 and others dated 05.01.2017] had also occasion to consider a similar issue. In this case, though proceedings u/s. 271(1)(c) of the Act were initiated for furnishing of inaccurate particulars of income, in the notice issued u/s. 274 r.w.s. 271 of the Act in the standard form, the charge for which it was issued was also not identified, as in the present case. In deleting the levy ,so far as non-specification of the default in the jurisdictional notice, the following findings w....
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.... Co. Pvt. Ltd. (supra) has in para 9 asunder: ...... Taking into consideration the decision of the Andhra Pradesh High Court which virtually considered the subsequent law and the law which was prevailing on the date the decision was rendered on 27.08.2012. In view of the observation made in the said judgement, we are of the opinion that the contention raised by the appellant is required to be accepted and in the finding of Assessing officer in the assessment order it is held that the A.O. has to give a notice as to whether he proposes to levy penalty for concealment of income or furnishing inaccurate particulars. He cannot have both the conditions and if it is so he has to say so in the notice and record a finding in the penalty order ....." 27. Applying the proposition of law laid down by the various Hon'ble High Courts including the Hon'ble Jurisdictional High Court, we do not find any merit for the penalty so imposed, accordingly, AO is directed to delete the penalty so imposed u/s. 271(1)(c) of Act. 28. In the result, appeal of the assessee isallowed iii) Similarly in the case of partner of assessee Shri Gulam Farooq Ansari Hon'ble ITAT J....
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....der are reproduced as under:- "As the assessee had not filed any appeal against order of the AO and it appears that the assessee is satisfied with the order passed by the AO. Therefore, it appears that the assessee has nothing to say and has no objection regarding imposing the penalty u/s 271(1)(c) of I.T. Act, 1961. Therefore, I impose a penalty of equal to 100% of tax sought to be evaded on account of the above acts of the assessee of Rs. 34,05,436/- i.e. 100% tax evaded." In the light of the above, we need to examine whether assessment order and the penalty order comply with the provisions of section 271(1)(c) of the Act. We find that on page 3 of the assessment order, the assessing order, AO observed as under:- 14 ITA No. 1033/JP/2016 Narayana Heights & Tower. "As the assessee has concealed/furnished the inaccurate particulars of income therefore, penalty u/s 271(1)(C) is also initiated." 3.3. As per section 271 (1)(c), the assessing officer is empowered to impose penalty if in the course of any proceedings under this Act is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. From the above provision....
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....No. 203/2017 order dated 17/08/2017 had confirmed the order of Hon'ble ITAT Jaipur Bench (Supra)(Copy at PB Page 141-142) In the case of Shri Murari Lal Mittal ITA No. 334/JP/2015 order dated 09/11/16 has canceled the penalty on the same grounds following the decision of Shri Shanker Khandelwal. vii) Further reliance is also placed on Hon'ble ITAT Jaipur bench in the case of Shri Lal Chand Mittal vs The DCIT, Central Circle-3, Jaipur in ITA No. 772/JP/2016 vide order dated 29/12/2016 2.5. The ld CIT(A) confirmed that penalty by holding that:- a) The plea has not been taken before the ld. AO. It is admitted position of law that the plea of the assessee is taken on the basis of facts available on record and being the legal issue the same can be taken at any stage of the proceedings. Being the co-terminus power vested to the CIT (A) he is also the authority to decide the issue raised before him. b) The dismissal of department's SLP by Hon'ble Apex Court in the case of CIT Vs SSA's Emerald Meadows is by a non speaking order:- Ld CIT(A) failed to appreciate that Hon'ble Apex Court dismissed the SLP of the department by mentioning that ....
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.... not applicable in the case of the assessee as in such case the penalty was initiated on the income himself declared by the assessee. Further in this the Hon'ble ITAT find that the satisfaction of AO was discernible from the assessment order that the penalty proceedings were proposed to be initiated for furnishing inaccurate particulars of income but in the case of assessee the penalty proceedings were initiated by holding that "Penalty proceedings u/s 271(1)(c) of the Act is initiated for concealment of income/for furnishing inaccurate particulars of income." e) The case in the case of K. P. Madhusudhana v/s CIT (2201) 118 Taxman 324 (SC) is also not applicable in the case of assessee as the same is on different facts and in view of subsequent decisions Hon'ble Jurisdictional High Court in the case of Shevata Construction Co Pvt. Ltd (supra) and decision of Hon'ble Apex court in the case of CIT Vs SSA's Emerald Meadows. f) The decision of M/s Airen Metals Pvt. Ltd Jaipur v/s ACIT ITA No. 820/JP/2016 of Hon'ble ITAT is not relevant in the case of the assessee because in such case the appeal of the assessee was rejected on the ground that the assessee did not f....
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....se cases, nor that the assessee has furnished inaccurate particulars of income. Any estimate is an opinion which is taken subjectively, when this difference of opinions leads to any addition, it cannot terminate into a penalty under s. 271(l)(c) of the Act. The decision of Shiv LalTak v. CIT [2001] 251 ITR 373/[2002] 121 Taxman 99 (Raj.) of Hon'ble Rajasthan High Court is also relevant. 5. Thus, it is manifestly clear that the sustained additions are a result of estimated disallowances of expenses and estimated trading addition. Accordingly, by respectfully following the above judgments/orders and by applying their ratio decidendi to the facts of this case, we are left with no option but to confirm the impugned order of learned CIT(A), who has also deleted the impugned penalty on the similar reasoning." 6. I have considered the rival contentions and carefully gone through the orders of the authorities below and found that the assessment of assessee was completed by the AO for AY 2005-06 to AY 2010-11 by estimation of Gross Profit @ 25% on the estimated Sales. Aggrieved by the order of the AO, the assessee preferred appeal before CIT(A) and Hon'ble ITAT Jaipur Bench.....