TMI Blog2015 (5) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... t : Shri V. Srinivasan, CA For the Respondent : Dr. P.K. Srihari,Addl. CIT (D.R) ORDER Per Shri Jason P. Boaz : This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-III, Bangalore dt.26.6.2014 for Assessment Year 2008-09 confirming the levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961 (herein after referred to as 'the Act') by the Assessing Officer. 2. The facts of the case, briefly, are as under :- 2.1 The assessee, an individual engaged in the business of running travels in the name style of M/s. Deepthi Kiran Travels, filed her return of income for Assessment Year 2008-09 on 29.6.2009 declaring a loss of ₹ 16,83,628. The return was processed under Section 143(1) of the Act and subsequently the case was taken up for scrutiny. The assessment was completed under Section 143(3) of the Act vide order dt.20.10.2010 wherein the loss of the assessee was determined at ₹ 8,20,127 in view of the following additions/disallowances made by the Assessing Officer :- i. Interest on housing loan, claimed as business expenditure : ₹ 8,26,701. ii. Accident fund collected fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act is not discernable whether the penalty proceedings is initiated for furnishing of inaccurate particulars of income or concealment of income under the facts and in the circumstances of the appellant s case. 4. The learned CIT (Appeals) is not justified in upholding the penalty under Section 271(1)(c) of the Act in respect of the additions of ₹ 8,26,701 being interest payment and ₹ 36,800 being amount collected from the drivers which was not accounted in the profit and loss account under the facts and in the circumstances of the appellant s case. 5. The authorities below failed to appreciate that the appellant has neither concealed any income nor furnished inaccurate particulars of income to warrant levy of penalty and therefore, the penalty levied under Section 271(1)(c) of the Act requires to be cancelled. 6. Without prejudice to the above, the penalty levied is highly excessive and liable tobe reduced substantially. 7. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and justice rendered and the appellant may be awarded costs in prosecuting the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities below ought to be cancelled. 5.2 The learned Departmental Representative supported the orders of the authorities below. 5.3.1 We have heard both parties and perused and carefully considered the material on record; including the judicial pronouncements relied on by the assessee on the issue of validity of the notice issued under Section 274 rws 271 of the Act dt.20.10.2010 for initiating penalty proceedings under Section 271(1)(c) of the Act as raised by the assessee at Ground No.3 in this appeal (supra). A perusal of the notice issued under Section 274 r.w.s. 271 of the Act dt.20.10.2010, reveals that the Assessing Officer has not deleted the inappropriate words and parts of the notice, whereby it is not clear as to the default committed by the assessee; i.e. whether it is the concealment of particulars of income or furnishing of inaccurate particulars of income that the penalty under Section 271(1)(c) of the Act is sought to be levied. We find that the Hon'ble High Court of Karnataka in its order in the case of M/s. Manjunatha Cotton Ginning Factory in ITA No.2564 of 2005 dt.13.12.2012 has held that such a notice, as has also been issued in the case on han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. But drawing up penalty proceedings for one offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law. It is needless to point out satisfaction of the existence of the grounds mentioned in Section 271(1)(c) when it is a sine qua non for initiation or proceedings, the penalty proceedings should be confined only to those grounds and the said grounds have to be specifically stated so that the assessee would have the opportunity to meet those grounds. After, he places his version and tries to substantiate his claim, if at all, penalty is to be imposed, it should be imposed only on the grounds on which he is called upon to answer. It 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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