TaxTMI 
TaxTMI 
TaxTMI 
2020 (10) TMI 793
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....(ii) In the assessment order directing to initiate the penalty proceeding and also in the impugned penalty order the alleged penalty has been imposed giving the finding that appellant has committed both the twin default which is against the provisions of law being both charges specified in section 271(1)(c) carries different meaning and operate in different sphere and (iii) Penalty show cause notice was issued in standard computer generated form without striking out inapplicable words and provisions and (iv) Ld. AO. never made known to appellant about invoking of the Explanation 1B of section 271(1)(c) before the levy of impugned penalty. 2. That without prejudice to appeal ground no. 1, the Id. C.I.T.(Appeals) has erred in confirming the penalty imposed u/ s. 271 (l) (c) at Rs. 4,48,050/ - without properly appreciating the facts of the case and law, therefore same may be deleted." 2. Briefly stated the assessee firm which is engaged in the business of a builder and a developer had e-filed its return of income for A.Y 2013-14 on 01.10.2013, declaring its total income at Rs. 1,47,59,000/-. The return of income was initially processed as such under Sec. 143(1) of the Act. Subs....
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....,50,000/- which were admittedly incurred by it during the year under consideration. In reply, the assessee tried to impress upon the A.O that no penalty under Sec .271(1)(c) was liable to be imposed in its hands. However, the A.O not finding favour with the submissions of the assessee imposed penalty under Sec. 271(1)(c) of Rs. 4,48,050/- for concealing the particulars of income and for furnishing inaccurate particulars, vide his order dated 29.09.2016. 5. Aggrieved, the assessee assailed the order passed by the A.O under Sec. 271(1)(c), dated 29.09.2016 in appeal before the CIT(A). Apart from assailing the levy of penalty on merits, the assessee also challenged the validity of the same, on the ground, that the fact as to whether the penalty proceedings were initiated for concealment of income or for furnishing of inaccurate particulars was neither discernible from the assessment order nor from the penalty notice issued by the A.O. It was pointed out by the assessee that the 'show cause' notice u/s 274 r.w.s 271, dated 31.03.2016 (hereinafter referred to as "SCN") was issued by the A.O in the standard printed form i.e without striking off the inapplicable default. It was further s....
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....T(A) was of the view that the judicial pronouncements relied upon by the assessee were clearly distinguishable on facts. Accordingly, in the backdrop of his aforesaid deliberations the CIT(A) rejected the assessee's claim that the A.O had wrongly assumed jurisdiction and imposed penalty under Sec. 271(1)(c) without validly putting it to notice as regards the nature of default for which the impugned penalty proceedings were initiated against it. Insofar the merits of the case were concerned, the CIT(A) was of the view that the claim of the assessee that as the addition made in its case was based on an 'agreed' basis in order to avoid protracted and endless litigation with an intent to buy peace of mind, thus, no penalty could have validly been imposed under Sec. 271(1)(c), did not merit acceptance. In order to fortify his aforesaid view the CIT(A) relied on the judgment of the Hon'ble Supreme Court in the case of MAK Data Pvt. Ltd. Vs. CIT (2013) 38 taxmann.com 448 (SC). Observing, that in case the assessee would not have been subjected to a survey action under Sec. 133A of the Act, the CIT(A) held a conviction that the undisclosed income of Rs. 14.5 lac which had surfaced on the ....
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....d the penalty proceedings for "concealment of income and furnishing inaccurate particulars of income", had thereafter, imposed the same by using the same phrase, thus, found no infirmity in levy of such penalty by the A.O. 9. We have given a thoughtful consideration and are unable to persuade ourselves to subscribe to the view taken by the CIT(A). As observed by us hereinabove, it is a matter of fact borne from the records that the A.O had in the aforesaid 'SCN' dated 31.03.2016 failed to point out the default for which penalty was sought to be imposed by him on the assessee firm. As observed by us hereinabove, the A.O in the 'SCN', dated 31.03.2016 had called upon the assessee to show cause as to why penalty u/s 271(1)(c) may not be imposed on it for having concealed particulars of its income or furnishing inaccurate particulars of such income. In our considered view, as both of the two defaults envisaged in Sec. 271(1)(c) i.e 'concealment of income' and 'furnishing of inaccurate particulars of income' are separate and distinct defaults which operate in their independent and exclusive fields, it was, thus, obligatory on the part of the A.O to have clearly put the assessee to noti....
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..... 'concealment of income' or 'furnishing of inaccurate particulars of income' is not merely an idle formality but is a statutory obligation cast upon him, which we find had not been discharged in the present case as per the mandate of law. 10. We would now test the validity of the aforesaid 'Show Cause' notice and the jurisdiction emerging therefrom in the backdrop of the judicial pronouncements on the issue under consideration. Admittedly, the A.O is vested with the powers to levy penalty under Sec. 271(1)(c) of the Act, if, in the course of the proceedings he is satisfied that the assessee had either 'concealed his income' or 'furnished inaccurate particulars of his income'. In our considered view as penalty proceedings are in the nature of quasi criminal proceedings, therefore, the assessee as a matter of a statutory right is supposed to know the exact charge for which he is being called upon to explain that as to why the same may not be imposed on it. The non specifying of the charge in the 'Show cause' notice not only reflects the non-application of mind by the A.O, but in fact, defeats the very purpose of giving a reasonable opportunity of being heard to the assessee as envi....
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....ng of inaccurate particulars of income' as contemplated in Sec.271(1)(c) are separate and distinct defaults which operate in their exclusive and independent fields, we, therefore, are unable to subscribe to the view taken by the CIT(A) that the A.O had validly imposed penalty for "concealment of income and furnishing inaccurate particulars of income" in respect of the aforesaid solitary addition of Rs. 14.50 lacs made in the hands of the assessee. Be that as it may, the fact that the A.O vide his 'SCN', dated 31.03.2016 had failed to put the assessee to notice as regards the default for which it was called upon to explain as to why penalty u/s 271(1)(c) may not be imposed on it, in our considered view, would suffice to divest the A.O from valid assumption of jurisdiction for imposing penalty under the said statutory provision. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Karnataka in the case of CIT Vs. SSA's Emerald Meadows (73 taxmann.com 241)(Kar), wherein following its earlier order in the case of CIT Vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Kar) the High Court had held that where the notice issued by the A.O under Sec. 274 r....