S. 276C Prosecution: If the Appeal is admitted on substantial questions of law, there is no justification for the DCIT to threaten the assessee with prosecution. Even if such prosecution is launched, the same shall not proceed till the pendency of the Appeal

1. Heard both sides. Perused the Application/Notice of Motion
requesting an out of turn hearing for admission of this Appeal.

2. For the reasons set out in the affidavitinsupport,
we grant
the request of the appellantassessee
and take up the Appeal for
admission forthwith.

3. Prima facie, the show cause notices, copies of which are at
pages 174 and 176 of the paper book, did not indicate what is the
lapse or act attributable to the assessee, for which the Revenue
proposes a penalty.

4. Prima facie, the ingredients of Section 271 of the Income
Tax Act, 1961 (for short, ‘IT Act’), which alone are relevant for
this case, are clear. Section 271 (1) Clauses (c) and (d) are very
clear and it would have to be indicated as to what is the act
attributale, whether it is concealment of the particulars of income
or furnishing of inaccurate particulars of income or concealing the
particulars of the fringe benefits or furnishing inaccurate
particulars of such fringe benefits or failure to comply with the
notices as are spelt out by Clause (b) of Subsection
(1) of Section
271 of the IT Act. The satisfaction has to be clearly spelt out and
which we do not think is spelt out from the present show cause
notices

5. Hence the Appeal raises the following questions of law. It is
admitted on the following substantial questions of law:

i) Whether on the facts and in the circumstances of
the case and in law, the Tribunal was right in
approving penalty of Rs.26,87,196/under
Section 271(1)(c) of the Act?

ii) Whether on the facts and in the circumstances of
the case and in law, was justified in not
appreciating that the Assessing Officer ought to
have made his mind whether initiation of penalty
is on account of furnishing of inaccurate
particulars or concealment of income in
accordance with the ratio laid down in the
decision of this Honourable Court in CIT v.
Samson Perinchery 392 ITR 4?

6. Heard both sides on the point of stay.

7. Once we have admitted the Appeal on substantial questions
of law, we do not think that there is any justification for the
Deputy Commissioner of Income Tax, Central Circle8(
1) to
threaten the appellant/applicant with any prosecution. Even if
such prosecution is launched, the same shall not proceed till the
pendency of this Appeal. The Notice of Motion is made absolute in
terms of prayer clause (a).