TMI Blog2019 (10) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly. - ITA Nos.1172 to 1178/Bang/2018 - - - Dated:- 1-10-2019 - Shri B.R Baskaran, Accountant Member And Shri Pavan Kumar Gadale, Judicial Member For the Appellant : Shri B.S Balachandra, Advocate For the Respondent : Shri R.N Siddappaji, Addl. CIT (DR) ORDER PER B.R BASKARAN, ACCOUNTANT MEMBER All these appeals filed by the assessee are directed against the orders passed by Ld CIT(A), Gulbarga and they relate to the assessment years 2008-09 to 2014-15. The appeals relating to AY 2008-09 to 2012-13 are related to penalty levied u/s 271(1)(c) of the Act and the other two appeals relate to the penalty levied u/s 271AAB of the Act. Since the Ld CIT(A) has confirmed the penalty levied in all the above said years, the assessee has filed these appeals challenging the orders passed by Ld CIT(A). 2. The facts in brief are that the assessee is a partner in a firm named M/s Sujatha Arms manufacturing company. The revenue carried out search and seizure operations in the hands of the assessee on 18-09-2013. During the course of search, it was noticed that the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culars the penalty is proposed to be levied. In respect of this, I have gone through the copy of the notice u/s 271 dated 30-11-12015 which is the enclosure to the submissions of the appellant during appellate proceedings. In the notice the paragraph tick marked is ** have concealed particulars of your income and furnished inaccurate particulars of such income. It is clear from the paragraph re-produced above which is part of the notice u/s 271 that it would have been vague if the word or is used in place of and to separate the words concealed the particulars of your income and furnished inaccurate particulars of such income . Hence the argument of the appellant in respect of specification of concealment or furnishing inaccurate particulars of income with the support of decision of Hon'ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory is not tenable in these facts and circumstances. The first ground of appeal fails on this account. It was probably presumed that the word or existed between concealed particulars of your income and furnished inaccurate particulars of income . 5. The Ld A.R submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly he submitted that the AO s action cannot be found fault with and hence the Ld CIT(A) was justified in rejecting this contention of the assessee. 8. We heard the parties on this legal issue and perused the record. There is no dispute with regard to the fact that the assessing officer has initiated penalty proceedings under both the limbs of sec.271(1)(c) of the Act, viz., for concealing particulars of income and for furnishing inaccurate particulars of income. There should not be any dispute that both the charges mentioned in sec.271(1)(c) convey different meaning. It is so stated by Hon'ble Supreme Court in the case of T.Ashok Pai vs. CIT (292 ITR 11). Hence any addition made by the AO would fall under any one of the limbs specified in sec.271(1)(c) and not under both the limbs. 9. It is well settled proposition of law that the AO has to be clear about the charge under which he has initiated penalty proceedings. If there is lack of clarity on this aspect, then the penalty order is liable to be quashed, since it shall be considered as a case of initiation of penalty proceedings witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee should know the grounds which he has to meet specifically. Otherwise, the principles of natural justice are offended. On the basis of such proceedings, no penalty could be imposed on the assessee; taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law; penalty proceedings are distinct from the assessment proceedings, though proceedings for imposition of penalty emanate from proceedings of assessment, they are independent and a separate aspect of the proceedings; 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 proceedings on the 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 invalid in the penalty proceedings. 11. The foregoing decisions make it clear that the assessing officer should be clear in his mind when he initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly, he submitted that there was no application of mind on the part of the AO and the same would vitiate the penalty proceedings as held by Hon'ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (supra). He further submitted that the Chennai bench of Tribunal has deleted penalty levied u/s 271AAB of the Act on identical circumstances in the case of The DCIT vs. Shri R Elangovan (ITA No.1199/Chny/2017 dated 05-04-2018). He further submitted that provisions of sec.271AAB prescribes three different types of penalty and in the case of Shri Suresh Chand Mittal vs. DCIT (ITA No.931/JP/2017 dated 02-07-2018), the Jaipur Bench of Tribunal has expressed the view that the AO should specify the nature of default mentioned in sec.271AAB in the notice itself. He submitted that the AO has not specified the nature of default in the notice issued by him for these two years. 15. The Ld D.R, on the contrary, submitted that the assessing officer has mentioned in the notice that the penalty shall be levied u/s 271AAB of the Act. He submitted that the assessee has also participated in the penalty proceedings and hence the defect, if any, pointed out by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable to AY 2013-14 and 2014-15, since the undisclosed income has been assessed in both the years. Hence, by virtue of provisions of sec.271AAB(2), which read as under, the provisions of sec.271(1)(c) are not applicable in respect of undisclosed income :- (2) No penalty under the provisions of section 270A or clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1) or sub-section (1A). 18. The provisions of sec. 271AAB(1) read as under:- 271AAB(1) The Assessing officer may, not withstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on after 1st day of July, 2012 (but before the date on which the Taxation Laws (second amendment) Bill, 2016 receives the assent of the President), the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,-- (a) A sum computed at the rate of ten percent of the undisclosed income of the specified previous year, if such assessee .. (b) A sum computed at the rate of twenty per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough authorized representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271AAB. We notice that the assessing officer, by issuing the show cause notice, has asked the assessee to offer explanation as to why an order imposing penalty for concealment of particulars of income and furnishing inaccurate particulars of income u/s 271AAB of the Act should not be passed. We have noticed earlier that the provisions of sec.271AAB refers to undisclosed income and penalty is also levied on undisclosed income . Hence reference to the charges related to sec. 271(1)(c) of the Act, viz., concealment of particulars of income or furnishing of inaccurate particulars of income, in the notice is irrelevant and not applicable to sec.271AAB of the Act. Hence, we find merit in the contentions of the assessee that the AO was not clear about the charge for which he has initiated penalty proceedings. 23. We also notice that the Ld CIT(A) has also cited both the provisions in the first page of his order. In row 4, against the expression Income assessed , the Ld CIT(A) has mentioned Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the Revenue on the basis of notice issued under Section 274 without taking into consideration the assessment order when the assessing officer has specified that the assessee has concealed particulars of income? 3. 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 CIT vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565. 4. 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''. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence the decision rendered by Hon'ble jurisdictional Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (supra), in our view, shall apply in the instant cases also. 26. The Ld D.R placed his reliance on the decision rendered by Hon'ble Allahabad High Court in the case of Shri Sandeep Chandak (supra). The following observations made by Hon'ble High Court are relevant here:- We have gone through the contents of the penalty notice and we find that in the penalty notice, which has been issued under Section 274 read with section 271, the assessing authority has clearly indicated that the proceedings under Section 271AAB being initiated and the reply of the show cause notice in writing on or before the date so as indicated will be considered before any such order is made under Section 271AAB. The full contents of the notice are not available. A perusal of the above said observations would show that the AO, in the above said case, has mentioned in the notice that the penalty proceedings u/s 271AAB has been initiated. However, in the instant case, the AO is asking the assessee to furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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