Prempal Singh vs The Income Tax Officer

1.

The penalty so, imposed u/s 271(1)(c) for Rs.175423 in unjust against the facts of the case and principal of natural justice The asst. order u/s 144 dt 15/03/2016 is invalid against the facts, against principal of natural justice and thus invalid. Penalty order arising as a result of an invalid asst. order be also held/void ab initio. Address in ITR is different to the address where notice u/s 143(2) was sent which remained unknown to assessee. It was challenged in asst. as well as penalty proceedings. The appeal in penalty case is valid even if no appeal is filed against asst. order. The appellant is allowed to produce fresh evidence and new arguments in penalty matters.

2.

The assessee's reply has not been considered/rejected without analysing the submission in penalty/appellate order. Not providing the details collected behind the back of the assessee even when requested specifically, leads to violation of principal of natural justice.

3.

The initiation of penalty in asst. order is for concealment of income whereas penalty order say it is for furnishing of inaccurate particulars. Both term are different and one cannot be penalised for the other reason when booked for the first reason. The penalty show cause notice is not clear as to which limb of sec 271 (1)(c)is to be answered.

4.

Deposit into bank account cannot be added to income u/s 68 as bank statement/passbook is not a part of assessee's books, the AO never saw the books of assessee though duly audited. Sec 68 is limited only to credit in assessee's books and not of any outsider (bank).

5.

The interest alleged to have been received in bank a/c is not known to assessee and who gave and when gave and on which account. In assessment as well as penalty proceedings question has been asked to ITO to provide such details which has not been responded. Audi Alteram partem is totally missing. Business bank a/c’s are current a/c attracting no interest.

6.

Justice should not only but should appear to have been done. The rules repeatedly upheld by courts in income tax proceeding has been flouted by the AO and confirmed by CIT (A)causing unwanted hurt to the appellant and redressal thereof is preyed. All additions/disallowances do not attract penalty u/s 271 (1) (c).

“63.

In the light of what is stated above, what emerges is as under: *********

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 law.

t)

The penalty proceedings are distinct from the assessment proceedings. The proceedings for imposition of penalty though emanate from proceedings of assessment, it is independent and separate aspect of the proceedings.

u)

The findings recorded in the assessment proceedings in so far as "concealment of income" and "furnishing of incorrect particulars" would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings.”

“Notice issued by the Assessing Officer u/s 274 r.w.s 271(1)(c) of 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 issue was decided in favour of the assessee.”

“21.

The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA's Emerald Meadows (2016) 73 Taxman.com 241 (Kar) , the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of 2016 by order dated 5th August, 2016.”