TaxTMI 
TaxTMI 
2021 (10) TMI 824
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....articulars of income or for furnishing of inaccurate particulars of income, either in the penalty initiation notice or in the assessment order dated 29.01.2016. Therefore, the penalty proceedings were void-abinitio. 3. The Brief facts of the case are that, the assessee company is incorporated in Hong Kong and is a part of CLSA Group a leading independent brokerage house in Asia. The Group provides equity broking, capital markets, merger and acquisition, and asset management services to global corporate and institutional clients, having substantial operations in the Asia-pacific region. The assessee provides regional and operational support services including back office support services to the Group companies and also a member of the Bombay Stock Exchange (BSE) and National Stock Exchange(NSE). In the financial year (F.Y)2010-11, the assessee has received service fees amounting to Rs. 71,58,54,279/- which has been offered to tax as fees for technical services on gross basis u/s 115A(1)(b)(BB) of the Act. The assessee company also received reimbursements amounting to Rs. 41,45,88,932/- for the costs incurred in procuring services from other services providers to meet its service ob....
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....income has been offered. Therefore, the A.O. is of the opinion that the assessee has furnished the inaccurate particulars of income by disclosing fees for technical services as reimbursement of expenses. Whereas the said amount was part of the service receipts as per the service level agreement and TDS has been deducted on the total remittances. Finally the A.O. was not satisfied with the explanations and levied the penalty u/s 271(1)(c) of the Act of Rs. 4,37,70,230/- and passed the order on 29-07-2016. 6. Aggrieved by the penalty order u/s 271(1)(c) of the Act, the assessee has filed an appeal before the CIT(A). In the appellate proceedings, the CIT(A) has considered the grounds of appeal, findings of the A.O, submissions of the assessee and additional ground of appeal. The CIT(A) has called for the remand report from the A.O and rebuttal/rejoinder of the assessee. The CIT(A) find the reimbursement of the expenses was treated as fees for technical services by the A.O. Whereas the CIT(A) considered the facts, submissions, objections filed before the DRP and the fact of deduction of TDS in Form-26AS where the reimbursement of expenses was treated as fees for technical services. Fi....
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....by not specifying either in the penalty initiation notice or in the assessment order dated January 29, 2016 the limb of section 271(1)(c) of the Act under which penalty proceedings have been initiated ie whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. Therefore, the penalty proceedings are void-ab initio. The above was duly forwarded to Assessing Officer. Being a legal matter the ground is admitted and adjudicated as there is no estoppels against statute. 15. I find from the assessment order that the following is recorded. 6.5 Penalty proceedings u/s.271(1)(c) are separately initiated for furnishing inaccurate particulars and thereby concealing the income. Thus the limb under which the penalty proceedings are initiated is clear. The aspect as to whether the initiation is for furnishing of inaccurate particulars of income or concealment of particulars of income, the details are in assessment order itself. Hence the additional ground is dismissed. 16. The appeal is partly allowed (allowed on quantum but additional ground on technical deficiency dismissed). 7. Aggrieved by the CIT(A) order, the Revenue has filed an App....
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....perly recording the satisfaction for the same? (3) Whether on the facts and in the circumstances of the case, the Tribunal was justified in deciding the appeals against the Revenue on the basis of notice issued under Section 274 without taking into consideration the assessment order when the assessing officer has specified that the assessee has concealed particulars of income? 3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short the Act') to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOMETAX - VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4 In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial questio....
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....otice by referring to the assessment order, which may or may not contain reasons for the penalty proceedings. The other course of action is the prevention of defect in the notice-and that prevention takes just a tick mark. Prudence demands prevention is better than cure. Answers: Question No.1: If the assessment order clearly records satisfaction for imposing penalty on one or the other, or both grounds mentioned in Section 271(l)(c), does a mere defect in the notice-not striking off the irrelevant matter-vitiate the penalty proceedings? 181. It does. The primary burden lies on the Revenue. In the assessment proceedings, it forms an opinion, prima facie or otherwise, to launch penalty proceedings against the assessee. But that translates into action only through the statutory notice under section 271(1)(c), read with section 274 of IT Act. True, the assessment proceedings form the basis for the penalty proceedings, but they are not composite proceedings to draw strength from each other. Nor can each cure the other's defect. A penalty proceeding is a corollary; nevertheless, it must stand on its own. These proceedings culminate under a different statutory scheme that remains d....