|CORAM:||Anil R. Dave J, L. Nageswara Rao J|
|CATCH WORDS:||concealment of income, furnishing inaccurate particulars of income, penalty|
|DATE:||August 5, 2016 (Date of pronouncement)|
|DATE:||January 11, 2017 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 271(1)(c): Omission by the AO to explicitly specify in the penalty notice as to whether penalty proceedings are being initiated for furnishing of inaccurate particulars or for concealment of income makes the penalty order liable for cancellation|
The Karnataka High Court had to consider the following question of law.
“Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case?”
The High Court ruled in favour of the assessee with the following observations:
“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 INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed.”
The department filed a Special Leave Petition to challenge the aforesaid judgement of the High Court. HELD by the Supreme Court dismissing the SLP:
“We do not find any merit in this petition. The special leave petition is, accordingly, dismissed.”
my view, agreeing with the bench, is, that s.271 r/w sub sec 1(c) makes it clear that the AO has to specify in his Notice why he imposed correctly whether imposition of penalty is due to no declaration on ROI or concealment;
makes it clear AO needs to rightly investigate to prove the ‘mens rea’ properly; if ‘mens rea’ (state of mind ) if not proved ‘penalty cannot be imposed is the substance of the case here.
The taxation laws ought to prove that there was a guilty mind in either case ; without guilty mind (mens rea) , crime cannot be proved;
A civil law cannot impose any penalty. so obviously, tax laws can always be based on civil procedure only, so obviously there cannot be any penalty; reason is there is no case of breach of contract between the government and the taxpayer, as no tax payer either ‘orally’ or in writing enters into a contract; even assuming it is some kind of contract then how ‘crime’ is established, is anybody’s guess that there is no ‘mens rea can be charged under Contract law, as, law of crimes essentially falls under ‘felony’ concepts; a felony (crime) is to cheat that is cheating means if one takes one’s money by some misappropriation or moneys worth things, if he fails to render back correctly guilty mind need to be established or ; here……
Do you means to say, under the Indian Income Tax Act, penalty cannot be levied since being a civil proceedings? How the tax can be collected without stringent measure in our law abiding country, I wonder.