TMI Blog2019 (12) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... and Pr. CIT vs. Sahara India Life Insurance Company Ltd [ 2019 (8) TMI 409 - DELHI HIGH COURT] we are of the considered view that when the notices issued by the AO are bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. - Decided in favour of assessee. - ITA No.2645/Del./2017, ITA No.2646/Del./2017, ITA No.2647/Del./2017 - - - Dated:- 29-11-2019 - Shri O.P. Kant, Accountant Member And Shri Kuldip Singh, Judicial Member For the ASSESSEE : Ms. Ashisha Mittal, CA For the REVENUE : Shri S.N.Meena, Sr. DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Since the identical issues has been raised in all the aforesaid appeals on the basis of identical set of facts and circumstances, the same are being disposed of by way of composite order to avoid repetition of discussion. 2. The appellant, Smt. Harmeet Kaur Sran, New Delhi (hereinafter referred to as 'the assessee ) by filing the aforesaid appeals, sought to set aside the impugned orders dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 6. Undisputedly, a search and seizure operation was carried out at the business / residential premises of assessee on 20/11/2009 being part of HBN group of cases and consequently proceeding u/s 153A were initiated. It is also not in dispute that in response to the notice assessee filed a return declaring nil income and accordingly assessment was completed u/s 153A of the Act. It is also not in dispute that during the search and seizure operation no incriminating material was seized from the premises of the assessee. 7. In the backdrop of the aforesaid facts and circumstances of the case, order passed by the lower authorities and arguments addressed by the authorized representatives of both the parties, the sole question arises for determination in this case is:- as to whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income during assessment proceedings? 8. Ld. AR for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax Central Circle 4, New Delhi NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCOME TAX ACT, 1961. (A.Y. 2009-10) Asstt. Commissioner of Income Tax Central Circle 4, New Delhi. Dated: 23.12.2011 To Smt. Harmeet Kaur Sran M-105, Guru Har Kishan Nagar Paschim Vihar, New Delhi Whereas in the course of proceedings before me for the assessment year 2009-10 it appears to me that you :- have without reasonable cause failed to comply with a notice under section 142(1)/143(2) of the Income Tax Act, 1961 dated have concealed the particulars of your income or furnished inaccurate particulars of such income in terms of explanation 1, 2,3,4 and 5. Undisclosed Income in the case of search. You are hereby requested to appear before me at 11.30 AM/PM on 24/01/12 and show cause why an order imposing a penalty on you should not be made under section 271 of the Income Tax Act, 1961. If you do not w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uous notice by incorporating both the limbs of section 271(1)(c). When the charge is to be framed against any person so as to move the penal provisions against him/her, he/she is required to be specifically made aware of the charges to be leveled against him/her. 11. Hon ble High Court of Karnataka in case of CIT vs. Manjunatha Cotton and Ginning Factory (supra) while deciding the identical issue held that when the AO has failed to issue a specific show-cause notice to the assessee as required u/s 274 read with section 271(l)(c), penalty levied is not sustainable. The operative part of the judgment is reproduced as under:- 59. As the provision stands, the penalty proceedings can be initiated on various ground set out therein. If the order passed by the Authority categorically records a finding regarding the existence of any said grounds mentioned therein and then penalty proceedings is initiated, in the notice to be issued under Section 274, they could conveniently refer to the said order which contains the satisfaction of the authority which has passed the order. However, if the existence of the conditions could not be discerned from the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not open to the authority, at the time of imposing penalty to impose penalty on the grounds other than what assessee was called upon to meet. Otherwise though the initiation of penalty proceedings may be valid and legal, the final order imposing penalty would offend principles of natural justice and cannot be sustained. Thus once the proceedings are initiated on one ground, the penalty should also be imposed on the same ground. Where the basis of the initiation of penalty proceedings is not identical with the ground on which the penalty was imposed, the imposition of penalty is not valid. The validity of the order of penalty must be determined with reference to the information, facts and materials in the hands of the authority imposing the penalty at the time the order was passed and further discovery of facts subsequent to the imposition of penalty cannot validate the order of penalty which, when passed, was not sustainable. 61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue, same was liable to be dismissed - Held, yes [Para 2] [In favour of assessee] 13. Hon ble Delhi High Court in case of Pr. CIT vs. Sahara India Life Insurance Company Ltd. (supra) while deciding the identical issue held as under :- 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 of2016 by order dated 5th August, 2016. 14. Following the decisions rendered in the cases of CIT vs. ..... 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