TaxTMI 
TaxTMI 
2020 (2) TMI 115
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....CIT(A] has erred in sustaining the penalty of Rs. 57,098/-, Rs. 2,03,388/- for A.Y. 2009-10 and 2010-11 respectively imposed u/s 271(l](c] of the Act without appreciating the facts of the case and detailed submissions made by the appellant. 2. That the Id. CIT(A) has erred in not appreciating the facts of the case by holding that there is no double taxation. 3. That the Id. CIT(A) has erred in not adjudicating Ground Nos. 2 & 3 raised before him. 4. That the order imposing penalty is bad in law and void ab initio since in the show cause notice issued u/s 274 read with section 271 the Id. AO has not struck off the irrelevant clause of the notice, meaning thereby the AO has not apprise the assessee about the specific charge, under which assessee has been held guilty of penal action. 5. The appellant craves leave to add, alter, amend, delete, substitute any ground of appeal on or before the date of hearing." 3. Briefly stated the facts necessary for adjudication of the controversy at hand are : On the basis of assessment order framed u/s 153A/143(3) of the Income Tax Act, 1961 (for short the "Act") at the income of Rs. 62,38,859/- and 1,31,64,333....
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.....08.2019 decided ITA No. 6472, 6473/Del./2016 the identical issue by confirming the deletion of penalty made by the lower appellate authority on account of invalid satisfaction and invalid notice. 9. In order to proceed further, we would like to peruse the notices issued by AO u/s 274 read with section 271(1)(c) of the Act to initiate the penalty proceedings which are extracted as under for ready perusal :- "NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCOME TAX ACT, 1961. Income Tax Office, New Delhi. Dated: 30.03.2014 To, Smt. Sumohita Kaur A-101, Lajpat Nagar, Part-I, New Delhi Whereas in the course of proceedings before me for the Assessment Year 2009-10 and 2010-11 it appears to me that you :- * have without reasonable cause failed to furnish me return of income which you were required to furnish by a notice given under section 22(l)/22(2)/34 of the Indian Income-tax Act, 1922 or which you were required to furnish under section 139(1) or by a notice given under section 139(2)/148 of the Income-tax Act, 1961, No dt or have without reasonable cause failed to furnish it within the time allowed and the ....
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....ed, 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 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 1....
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....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 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. Si....
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.... India in SLP No. 11485 of2016 by order dated 5th August, 2016." 14. Following the decisions rendered in the cases of CIT vs. Manjunatha Cotton and Ginning Factory, CIT vs. SSA's Emerald Meadows and Pr. CIT vs. Sahara India Life Insurance Company Ltd. (supra), we are of the considered view that when the notices issued by the AO are bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. 15. Even the AO has failed to apply his mind at the time of recording satisfaction at the time of framing assessment to initiate the penalty proceedings u/s 271(1)(c) of the Act as to under which limb of section 271(1)(c) i.e. for concealing particulars of income or furnishing inaccurate particulars of such income penalty proceedings have been initiated rather written vague and ambiguous satisfaction by recording that, "penalty proceedings u/s 271(1)(c) are initiated". So, very initiating penalty proceedings on the basis of vague and ambiguous satisfaction rather "no satisfaction" are bad in law and as such not sustainable. 16. Not only this even at the time of initiating....