TaxTMI 
TaxTMI 
2021 (6) TMI 249
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....Delhi (hereinafter referred to as 'the Revenue') by filing the present appeal sought to set aside the impugned order dated 03.06.2016 passed by the Commissioner of Income-tax (Appeals)-23, New Delhi deleting the penalty order dated 29.09.2015 passed u/s 271(1)(c) of the Income-tax Act, 1961 (for short 'the Act'), qua the assessment year 2012-13 on the grounds inter alia that :- "1. The order of Ld. CIT (A) is not correct in law and on facts. 2. On the facts and circumstances of the case, the Ld. CIT (A) has erred in law in cancelling the penalty amounting to Rs. 3,26,61,833/- imposed by the AO u/s 271(1)(c) of the Income-tax Act, 1961." 3. The cross objector, M/s. Nexus Infracon Pvt. Limited (hereinafter referred to as ....
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....ment. Declining the contentions raised by the assessee, AO levied the penalty to the tune of Rs. 3,26,61,833/- @ 100% of the tax sought to be evaded. 5. Assessee carried the matter by way of an appeal before the ld. CIT (A) who has deleted the penalty by allowing the appeal. Feeling aggrieved, the Revenue as well as assessee has come up before the Tribunal by way of filing the present appeal and cross objections respectively. 6. Assessee has not preferred to put in appearance despite issuance of the notice and consequently, we proceeded to decide the present appeal with the assistance of the ld. DR as well as on the basis of documents available on the file. 7. We have heard the ld. Departmental Representative for the Revenue to the....
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....rn of income at Rs. 10,06,10,680/-. Had the notice u/s 153A of the Act been not issued to the assessee income of Rs. 10,05.53,048/- would have escaped assessment. 11. However, bare perusal of the assessment order more particularly para 5 goes to show that AO has failed to apply his mind to record his valid satisfaction as to whether he is initiating the penalty proceedings u/s 271AAB or initiating penalty proceedings u/s 271(1)(c) of the Act. For ready perusal, operative part of the assessment order is extracted as under :- "5. During the course of assessment proceedings it has been noticed that the assessee company had filed its return of income u/s 139(1) of the Act declaring loss of Rs. 57,632/- and subsequently in response t....
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....penalty proceedings by the assessee. So, recording a valid satisfaction by the AO is a sine qua non for initiating the penalty proceedings u/s 271(1)(c) of the Act, without which subsequent proceedings are nullity. 14. Hon'ble High Court of Karnataka in case of CIT vs. Manjunatha Cotton and Ginning Factory 359 ITR 565 held that valid satisfaction is mandatory requirement for initiating the penalty. Operative part of the judgment is extracted as under :- "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....
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....ation, 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 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 inaccu....