TMI Blog2015 (6) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant : Shri V Srinivasan, CA For the Respondent : Dr P K Srihari, Addl. CIT (DR) ORDER Per Shri Jason P. Boaz: This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-I, Bangalore dt.11.9.2013 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 for Assessment Year 2002-03, with partial modification. 2. The facts of the case, briefly, are as under :- 2.1 The assessee, a company carrying on the business of transporters, filed its return of income for Assessment Year 2002-03 on 29.10.2002 declaring NIL income after setting off unabsorbed depreciation of Assessment Year 1996-97 to the extent of ₹ 2,54,654. 'Book Profits' of ₹ 1,45,662 were computed and declared under Section 115JB of the Act. The case was selected for scrutiny and the assessment was completed under Section 143(3) of the Act vide order dt.28.3.2005, wherein the income of the assessee was determined at ₹ 3,06,290 after setting off of unabsorbed depreciation of ₹ 25,57,780; as against the returned income at Nil; in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 271(1)(c) of the Act, is bad in law in as much as, the ld. Assessing Officer has neither reached any satisfaction nor has such satisfaction been recorded in the assessment order and consequently, the very initiation of proceedings under Section 271(1)(c) of the Act, is not in accordance with the requirements of section 271(1) of the Act and consequently, the order of penalty founded on the invalid initiation of penalty proceedings is liable to be cancelled. 3. The ld. CIT (Appeals) is not justified in upholding the penalty under Section 271(1)(c) of the Act in respect of the following additions of ₹ 9,49,590 sustained in appellate proceedings under the facts and in the circumstances of the appellant's case. a) Unexplained cash deposit in the Bank account : Rs.9,00,450 b) Unexplained cash credit in the name of Ms. Rahana Ahmed : Rs.49,140 Rs.9,49,590 4. The authorities below failed to appreciate that the appellant has neither concealed any income nor furnished inaccurate particulars o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under Section 274 r.w.s. 271 of the Act dt.28.3.2005 for initiation of penalty proceedings under Section 271(1)(c) of the Act for Assessment Year 2002-03. The learned Authorised Representative also placed before the Bench, for our perusal, the original notice dt.28.3.2005 issued by the Assessing Officer. A perusal of the notice issued under Section 274 r.w.s. 271 of the Act dt.28.3.2005, 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 hand, is invalid and the consequential penalty proceedings are also not valid. The relevant portion of the judgment of the Lordships at paras 59 to 61 thereof is extracted hereunder for ready reference :- '59. As the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfaction 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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