TaxTMI 
TaxTMI 
2019 (10) TMI 1169
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....osit of Rs. 1,000 in this Bank Account and about 121 deposits of money by cheques totalling in all to a sum of Rs. 17,48,674/-. The Assessee was asked to explain the transaction i.e., the source for the deposits in the various bank accounts. The Assessee's reply was that during the previous year he had income from trading in iron and steel under the name M/s. Lohit Wires & Steels. The VAT registration was obtained for this business only in the month of November, 2017. Prior to obtaining VAT registration he could not open Current Account and was therefore doing trading in iron and steel and the cheque deposits in the bank account are nothing but sales in the course of such business. The Assessee could not give details of persons to whom he sold steel and who had issued cheques to him. In the circumstances the sum of 17,48,674/- was added to the total income of the Assessee as unexplained cash credit u/s.68 of the Act. 3. Before CIT(A), the Assessee could show evidence of sale to various parties. The CIT(A) accepted the evidence so filed and restricted the addition made by the AO from Rs. 16,48,674 to Rs. 6,99,470/-. 4. In respect of the addition made as aforesaid, the AO initi....
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....sion the Bench followed decision of Hon'ble Karnataka High Court in the case of CIT Vs. Sri Durga Enterprises (2014) Taxmann.com 442 (Karnataka). The CIT(A) also placed reliance on the decision of ITAT Hyderabad Bench in the case of Jyothirmoy Yamsani Vs. DCIT wherein the ITAT Hyderabad held that the decision of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory (supra) is not applicable where there is clarity in the assessment order or the penalty proceedings which shows the mind of the AO that he is proceeding to impose penalty for a particular default i.e., "Concealing Particulars of income" or "Furnishing inaccurate particulars of income". 8. A Co-ordinate Bench in the case of Shri A Nagarju (ITA No.2196/Bang/2016 dated 6/4/2018), has considered the decision cited by the learned DR in the case of P.M.Abdullah (supra) and has held that the same is contrary to the decision of Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Spinning Mills Ltd., (supra) and therefore cannot be followed. The decision rendered in the case of Sri Durga Enterprises (supra) was in a totally different context of defect in notice issued u/s.148 of the Ac....
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....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 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 imp....
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....fferent. 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 that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 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 nonapplication of mind." 10. 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 Sect....
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....ncome have been disclosed by him, no penalty could be imposed. n) The direction referred to in Explanation IB to Section 271 of the Act should be clear and without any ambiguity. o) If the Assessing Officer has not recorded any satisfaction or has not issued any direction to initiate penalty proceedings, in appeal, if the appellate authority records satisfaction, then the penalty proceedings have to be initiated by the appellate authority and not the Assessing Authority. 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 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 penal....