AI Drafter 
TaxTMI 
TaxTMI 
2016 (12) TMI 1902
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....tion of the Assessing officer. 6. Before me, ld A.R. of the assessee filed a paper book, wherein, at page 5 placed is a copy of notice u/s. 274 r.w.s. 271(1)(c) of the Act. He pointed out that in the said notice, the Assessing Officer has observed as under: "Whereas in the course of proceedings before me for the assessment year 2011-12, it appears that you have concealed the particulars of your income or furnished inaccurate particulars of such income." 7. Hence, he pointed out that the notice has been issued without application of mind by the Assessing officer as to whether the assessee has concealed its income or furnished inaccurate particulars of its income. Hence, he submitted that the penalty order passed by the Assessing officer u/s.271(1)(c) is bad in law. For this proposition, he relied on the decision of ITAT, Calcutta in the case of Suvaprasanna Bhatracharya vs ACIT (ITA No.1303/Kol/2010 for A.Y. 2006-07) order dated 6.11.2015, wherein, the following decisions of Hon'ble High courts are relied upon: i) CIT vs. Manjunatha Cotton and Ginning Factory, 359 ITR 565 (Kar) ii) Manu Engineering, 122 ITR 306 (Guj) iii) Virgo Marketing, 17....
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....n 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 farm 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 basics of such proceedings, no penalty could be imposed on the asse....
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.... 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 Ashok Pal reported in 292 ITR 11 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 MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING . reported in 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. Similar is the case for furnishing inaccurate particulars of income. The standard pro forma without striking of the relevant clauses will lead to an inference as to non-application of mind." The final conclusion of the Hon'ble Court was as follows:- 63. In the light of what is stated above, what emerges is as under: a) Penalty under Section 271 (1 )(c) is a civil liabilit....
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....m, no penalty could be imposed. n) The direction referred to in Explanation IB to Section 271 of the Act should be clear and without any ambiguity. o) If the Assessing Officer has not recorded any satisfaction or has not issued any direction to initiate penalty proceedings, in appeal, if the appellate authority records satisfaction, then the penalty proceedings have to be initiated by the appellate authority and not the Assessing Authority. p) Notice under Section 274 of the Act should specifically state the grounds mentioned in Section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income q) Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law. r) The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. s) Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in Jaw. t) The penalty proceedings are distinct fro....