The court established that an assessing officer's satisfaction of concealment of income during assessment suffices to initiate penalty proceedings under Section 271(1)(c), irrespective of whether specific grounds are detailed in the show-cause notice.

JUDGMENT :

1. Heard Smt. Smita Das De, learned senior standing counsel for the appellant/revenue and Mr. Abhratosh Majumder, learned senior advocate assisted by Mr. AvraMazumder, learned counsel for the respondent/assessee.

2. The present appeal relates to penalty under section 271(1)(c) of the INCOME TAX ACT , 1961 (hereinafter referred to as the said ‘Act, 1961’) relating to assessment years 2006-07 and 2007-08.

3. This appeal was admitted by this Court by order dated 14th May, 2018 on the following substantial question of law :

“Whether the penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961 are invalid if the show-cause notice does not specifically spell out the grounds for imposition of the proposed penalty?”.

Facts

4. Briefly stated facts of the present case are that a search was conducted by the income tax department on 23.11.2007 under Section 132 (1) of the Act, 1961 against various persons and business concerns of “Thakur Prasad Sao Group of Chaibasa” at different locations of Chaibasa and Kolkata. A survey was conducted under section 133A of the Act was carried out simultaneously at different places of the Group at Joda (Orissa), Rourkela, Jamshedpur and Tirildih(Jamshedpur). The aforesaid Group is engaged in mining of iron ore, manufacturing of sponge iron and trading in liquor. In the course of search and seizure operations, Panchnama were drawn in the name of various assessees in the Group including the assessee herein. After the search and seizure operations, the respondent/assessee has disclosed income of Rs.4,99,00,000/-through Sri R.P. Sao, director of the company for the assessment year 2006-07. A notice under section 153A of the Act was issued and assessment was completed determining total income of the respondent/assessee at Rs.27,14,06,050/-. Against the aforesaid assessment order under section 153A, the respondent/assessee filed an appeal before the CIT(A) who granted the relief by deleting additions of Rs.54,91,493/-. During the course of assessment proceedings, the respondent/assessee admitted that cash amounting to Rs.4,20,19,077/-was received without there being any supply of material to the party concerned, i.e. Sree Metallik Limited. On the basis of the aforesaid entries, Sri Ramesh Prasad Sao declared an undisclosed income of Rs.4,30,00,000/-including the aforesaid amount, in the return of income filed under Section 153A for the assessment year 2007-08. Under invoicing of sales was also admitted by the respondent/assessee which was not recorded in the books of accounts that were offered to tax as part of disclosure under Section 132 (4) of the Act. (Accordingly, a sum of Rs.19,25,388/-for the assessment year 2006-07 and Rs.43,02,020/-for the assessment year 2007-08 were disclosed as an additional income pursuant to the search.) It was also found that expenditures under various heads were enhanced by the assessee to the extent of Rs.4,79,05,925/-which the respondent/assessee admitted to be not genuine business expenses and, accordingly, disclosed additional income pursuant to the search in the assessment year 2006-07. Thus, a total sum of Rs.4,99,00,000/-was admitted as undisclosed income in the assessment year 2006-07 which forms part of total disclosure of Rs.27 crores of the Group made under Section 132 (4) of the Act, 1961.

5. Similarly, for the assessment year 2007-08 notice under section 153A of the Act, 1961 was is