TaxTMI 
TaxTMI 
2021 (3) TMI 1052
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..../Del/2019, 8102/Del/2019 & ITA No. 8165/Del/2019 dated 16/08/2019 passed by CIT(A)'s-24, New Delhi for assessment years 2010-11, 2011-12, 2012-13 2013-14, 2014-15, 2015-16 & 2016-17 respectively. 2. The grounds of appeal are as under:- I.T.A. No. 8166/DEL/2019 (A.Y 2010-11) 1. The CIT(A) erred in law and on facts in confirming the levy of penalty of Rs. 48,364/- u/s 271 (l)(c) of the Act on account of additional income of Rs. 1,56.520/- offered by the assessee in his return of income filed u/s 153A while ignoring the facts, written submissions and evidences placed on record and rejecting the bonafide explanation of the assessee for non- imposition of the penalty. Thus, the penalty so levied should be cancelled. I.T.A. No. 8167/DEL/2019 (A.Y 2011-12) 1. The CIT(A) erred in law and on facts in confirming the levy of penalty of Rs. 5,50,527/- u/s 271 (l)(c) of the Act on account of additional income of Rs. 17,81,640/-/- offered by the assessee in his return of income filed u/s 153A while ignoring the facts, written submissions and evidences placed on record and rejecting the bonafide explanation of the assessee for non- imposition of the penalty.....
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....ions and evidences placed on record and rejecting the bonafide explanation of the assessee for non- imposition of the penalty. Thus, the penalty so levied should be cancelled." I.T.A. No. 8100/DEL/2019 (A.Y 2013-14) The CIT(A) erred in law and on facts in confirming the levy of penalty of Rs. 1,18,737/- u/s 271 (l)(c) of the Act on account of additional income of Rs. 3,84,261/- offered by the assessee in his return of income filed u/s 153A while ignoring the facts, written submissions and evidences placed on record and rejecting the bonafide explanation of the assessee for non- imposition of the penalty. Thus, the penalty so levied should be cancelled. I.T.A. No. 8101/DEL/2019 (A.Y 2014-15) The CIT(A) erred in law and on facts in confirming the levy of penalty of Rs. 9,65,058/- u/s 271 (l)(c) of the Act on account of additional income of Rs. 31,73,165/- offered by the assessee in his return of income filed u/s 153A while ignoring the facts, written submissions and evidences placed on record and rejecting the bonafide explanation of the assessee for non- imposition of the penalty. Thus, the penalty so levied should be cancelled. I.T.A. No....
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.... for non- imposition of the penalty. Thus, the penalty so levied should be cancelled. I.T.A. No. 8165/DEL/2019 (A.Y 2016-17) The CIT(A) erred in law and on facts in confirming the levy of penalty of Rs. 42,145/- u/s 271 AAB of the Act on account of additional income of Rs. 2,10,723/- offered by the assessee in his return of income filed u/s 153A while ignoring the facts, written submissions and evidences placed on record and rejecting the bonafide explanation of the assessee for non- imposition of the penalty. Thus, the penalty so levied should be cancelled. 3. Firstly, we are taking up facts of ITA No. 8166/Del/2019 for Assessment Year 2010-11 as the lead case. Search and seizure operation u/s 132 of the Act was carried out at the premises of Shri Ashish Mittal along with K R B L Group of cases on 30/03/2016. The Assessing Officer observed that incriminating documents were found and seized during the course of search at the residential premises of the assessee. Thereafter in assessment proceedings in response to notice u/s 153A of the assessee filed return showing income of Rs. 9,59,650/- where as in the original return of income u/s 139 of the Act, the assess....
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....t whether it is a concealed income or furnishing of inaccurate particulars. The Ld. AR relied upon the decision of the Hon'ble Supreme Court in case of CIT vs. SSA's Emerald Meadows (2016) 73 Taxman.com 248 (SC) and CIT v. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Kar). The Ld AR further submitted that the Hon'ble Delhi High Court in case of Pr. CIT Vs. M/s. Sahara India Life Insurance Company Ltd. (ITA No.475/2019 vide order dated 02.08.2019) held that notice issued by the Assessing Officer would be bad in law if it did not specify under which limb of Section 271(1)(c) of the Act penalty proceedings had been initiated. Therefore, the Ld. AR submitted that the penalty order itself becomes bad in law. The Ld. AR further submitted that surrendering unaccounted money as alleged by the Assessing Officer as well as by the CIT(A) does not attracted the provisions of Section 271(1)(c) and, therefore, on merit as well the penalty order does not sustain. 6. The Ld. DR on the other hand while supporting the order of Ld.CIT(A) filed the following written submissions. "The issue in aforesaid cases is of imposition of penalty on account of income disclosed by the asses....
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....n as against any addition made by the AO. 5. The assessee has relied on the decision of Hon'ble High Court of Karnataka in the case of Manjunatha Cotton and Ginning Factory which is the basis for decision in the case of SSA Emerald decided by Hon'ble Supreme Court. It may be relevant to take note of the fact that the decision of Manjunatha Cotton is in respect of four different assessee out of which the following ground of appeal are in the respect of M/s. Veerabhadrappa Sangappa & Co. a partnership firm carrying on the business of Mining & Processing of iron ore and sale and export (ITA No.5020 of 2009). 1. Whether the notice issued under Section 271(1)(c) in the printed form without specifically mentioning whether the proceedings are initiated on the ground of concealment of income or on account of furnishing of inaccurate particulars is valid and legal? 2. Whether the proceedings initiated by the Assessing Authority were legal and valid? 6. It is to point out that the facts in the case of M/s. Veerabhadrappa Sangappa & Co. are clearly distinguishable. In the Sangappa case, the Assessing Officer had made additions under Section 69 of th....
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....gs and should have full opportunity to meet the case of the Department and show that the conditions stipulated in Section 271(l)(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 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 imposed on the assessee." 60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two offences but in such cases the initiation of the penalty proceedings also must be for both the offen....
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....se of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 171 Taxmn 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 non-application of mind..." 9. As highlighted above in the aforesaid cited decision at para 59 of the judgment of Hon'ble Karnataka High Court that 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. I find that Hon'ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton & Ginning Factory repor....
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....ice would mean warn someone of something about/or likely to occur. Black's Law Dictionary, Eighth Edition, defines the expression 'notice' to mean having actual knowledge of a fact; has received information about it; has reason to know it; knows about the related fact. In CST Vs. Subhash & Company, (2003) 3 SCC 454, Supreme Court deliberated upon the concept of notice and observed that the term 'notice' has originated from the Latin word "notifia" which means "being known" or "a knowing". Thereafter, Supreme Court referred to the definition of the word 'notice' 14/19 assessee had furnished inaccurate particulars of income, penalty proceedings under Section 271(l.)(c) were also initiated separately. Therefore, it was apparent that penalty proceedings were initiated for furnishing inaccurate particulars of word notice in various general and judicial dictionaries. Without adverting to the large number of definitions, suffice it to say notice would mean information, warning or announcement of something impending; notice in its legal sense may be defined as information concerning a fact communicated to a party by an authorized person or actually derived by hi....
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....in question constituted the concealed income of the assessee. 3. It is trite law that the voluntary disclosure does not release the assessee from the mischief of penal proceedings. 4. The surrender of income in this case was not voluntary because the offer of surrender was made after the detection made by the Assessing Officer, it cannot therefore be said that the surrender of income was voluntary. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during course of the assessment proceedings." 14. In view of the above principles, it is very much evident that the voluntary disclosure of income does not release the assessee from the mischief of penal proceedings. 15. It has been held in the case of CIT v. Dr. R.C. Gupta & Co. (1980) 122 ITR 567 (Raj) that once the assessee admits that certain amount represents his income, no further evidence would be necessary to show that it was the amount which represented his income or that it represented his concealed income. Further, it has been held in the case of Weste....
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....claims any income based on any entry in any Document, then, not withstanding that such income is declared by him in any return of income furnished on or after the date of search is deemed to be a case of concealment of income. The assessee argued that explanation 5A is not applicable in his case because the notings in the seized document are in respect of expenditure and not in the nature of income. It is prayed that this argument is without merit because unexplained expenditure would be assesses as income in the hands of the assessee which basically means that the assessee invested his unaccounted income to meet such unexplained expenses. It is the case of two sides of same coin. Moreover, the assessee on his own surrendered the income on account of entries of house renovation expenses as recorded in seized record Thus, the explanation 5A is squarely applicable in the facts of the present case. 18. The assessee has relied on case laws which are not applicable to the facts of the case as the same are not search cases and explanation 5A was not operative in such cited cases. Penalty under Section 271AAB;- 19. Penalty under section 271AAB is applicable to t....
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....e is the income surrendered by the assessee." 7. We have heard the rival arguments made by both the parties and perused the material available on record. It is pertinent to note that Section 271 has specifically given the procedure upon which rather to say provisions upon which the penalty is attracted in a particular case. Firstly, the Assessing Officer has to give the satisfaction that the person has failed to comply with the notice under Sub Section 2 of Section 115WD or under Sub Section 2 of Section 115WE or under Sub Section 1 of Section 142 or Sub Section 2 of Section 143 or fails to comply with a direction issued under Sub Section 2 A of Section 142 or has concealed the particulars of his income or furnished inaccurate particulars of such income. Thus, the Assessing Officer has to first give his satisfaction in the assessment order itself about the concealment of particulars of income or furnishing of inaccurate particulars of such income in the assessment order while initiating the penalty proceedings u/s 271(1)(c). In the present case, from the perusal of the assessment order, it is seen that the Assessing Officer has simply stated that "I am satisfied that the assesse....
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....aid the taxes thereupon. Thus, on the merit also the assessee has proved that the penalty does not survive. 8. The Ld. DR has relied upon the decision of SSA's Emerald thereby making the difference of opinion that there are four different assessee's and in case of M/s Veerabhadrappa Sangappa & Company the facts are distinguishable. But the overall principle given by the Hon'ble Apex Court remains in legal parlance that the penalty has to be imposed on a clear specific manner which is given under the Income Tax Statute while invoking Section 271(1)(c) & that cannot be over looked. The Ld. DR relied upon the decision of Hon'ble Bombay High Court in case of Ventura Textile Ltd. which states that the assessee once received notice, the striking of specific limb does not vitiate the penalty order. But after going through the said decision of the Hon'ble Bombay High Court the Hon'ble High Court also reiterated that the initiation of penalty has to be specific though the technicality might not matter in the initial stages but in the penalty order it should be in consonance with the final decision of the Revenue Authorities. Thus, in-fact, the decision of the Hon'ble Bombay High Court al....
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....101/Del/2019 for Assessment Year 2014-15 is allowed. 16. Facts of 8161/Del/2019 For Assessment Year 2013-14 in case of Kunal Gupta are identical and hence we are following the earlier order for Assessment Year 2010-11. Thus, ITA No. 8161/Del/2019 for Assessment Year 2013-14 is allowed. 17. Facts of 8162/Del/2019 for Assessment Year 2014-15 in case of Kunal Gupta) are identical and hence we are following the earlier order for Assessment Year 2010-11. Thus, ITA No. 8162/Del/2019 for Assessment Year 2014-15 is allowed. 18. Facts of ITA No. 8163/Del/2019 Assessment Year 2013-14 in case of Ayush Gupta are identical and hence we are following the earlier order for Assessment Year 2010-11. Thus, ITA No. 8163/Del/2019 for Assessment Year 2013-14 is allowed. 19. ITA No. 8164/Del/2019 for Assessment Year 2014-15 in case of Ayush Gupta are identical and hence we are following the earlier order for Assessment Year 2010-11. Thus, ITA No. 8164/Del/2019 for Assessment Year 2014-15 is allowed. 20. Now, we are taking up facts of ITA No. 8172/Del/2019 for Assessment Year 2016-17. A search and seizure operation u/s 132 of the Act was conducted at the business and residential premises o....