TaxTMI 
TaxTMI 
2018 (1) TMI 1549
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....1,36,100/-. Subsequently notice under section 148 was issued and the assessment was completed under section 143(3) r.w.s. 147 on 23/12/2010. In the assessment order the Assessing Officer made further additions of Rs. 2 lakhs under section 69 and Rs. 16,00,740/- on account of difference in books of accounts. The total income thus assessed was Rs. 1,25,38,090/-. The Assessing Officer initiated penalty proceedings and passed an order under section 271(1)(c) levying a penalty of Rs. 40,70,658/-. The Assessing Officer has stated that the additional income of Rs. 1,01,36,100/- declared by the assessee was only after the survey operations and therefore it is clear that had the survey been not conducted and documents revealing unexplained investments made by the assessee in the landed properties were impounded, the ass would not have declared the additional income. The relevant portion of the order is reproduced herein: "It is undisputed that the return including the additional income declared by the assessee was filed only after the survey operations. Therefore, it is crystal clear that had the survey been not conducted in the assessee's case and the documents revealing unexp....
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.... income was admitted by the assessee only due to survey under section 133A. Though the assessee has claimed that the additional income was offered voluntarily during the survey and only to purchase peace with the department and avoid litigation. However, on perusal of the sworn statement recorded from the assessee on 19/03/2010 during the survey, it is revealed that the disclosure was not voluntary, rather the assessee has admitted suppression of profits in the original return filed. The relevant portion of the sworn statement is reproduced herein: Q. 14 It is seen from the computer printouts taken from the computer in which the amounts of your company are maintained that there is huge profits in M/s. Mathew Sons Agencies (P) Ltd. during the above financial years. Have you paid tax and filed your returns showing this? A. 14 It is true that there are omissions in including the actual profit in my I.T. returns for self, wife and my company. Moreover, the Company has not filed the returns for the last two assessment years i.e. 2008-09 and 2009-10. I am ready to file all the due returns and to revise my companies, my wife's name and in my name during the assessmen....
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....relevant portion of the show cause notice issued u/s. 274 of the Act, would render the proceeding for imposition of penalty as null and void. He drew our attention to the copy of the notice issued u/s. 274 dated 23/12/2011 for the assessment year 2008-09 which is placed at pg. 37 of the paper book and also notice dated 23/12/20111 for the assessment year 2009-10 which is placed at pg. 42 of the paper book. 8. The Ld. AR also relied on the following judgments to this effect: 1. H. Lakshminarayana vs. ITO (41 ITR (Trib) 465) (Bangalore) 2. Deepak Kumar Patwari vs. ACIT, Central Circle X-Kolkata (ITA Nos. 616 to 618/Kol/2013 dt. 3.2.2016) (ITAT, Kolkata) 3. Dr. Sarita Milind Davare vs. ACIT CC-40 (ITA No. 2187/Mum/2014 dt. 21/12/2016)(ITAT Mumbai E Bench) 4. Jahangir Vs. ACIT (ITA No. 1261/Mum/2011-ITAT, Mumbai) 5. Orbit Enterprises vs. ITO, Mumbai (ITA Nos. 1596 & 1597/Mum/2014 dt. 01/09/2017) (ITAT, Mumbai Bench "C") 6. CIT, Bangalore vs. SSA's Emerald Meadows (ITA 380/2015 dt. 23/11/2015(Kar.) 7. CIT & Another vs. SSA's Emerald Meadows (SLP(c)/2016 8. Gangadhara Palo vs. Revenue Office & Another (201....
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....Hon'ble Karnataka High Court in the case of CIT & Anr. v. Manjunatha Cotton and Ginning Factory (supra) has laid down the following principles to be followed in the matter of imposing penalty u/s. 271(1)(c) of the Act. "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 about the grounds on which they intend imposing penalty on him as the Section 274 ma....
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.... 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 that concealment of income and furnishing inaccurate particulars of inco....
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....lf 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 bona fide, an order imposing penalty could be passed. m) If the explanation offered, even though not substantiated by the assessee, but is found to be bona fide 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 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 auth....