TMI Blog2015 (8) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Departmental Representative. The fact that it is clear that the impugned notices under Section 274 rws 271 of the Act dt.29.12.2011 do not have the appropriate portions marked to specify as to whether the penalty is proposed to be levied for concealment of income or for furnishing of inaccurate particulars of income; which fact has not been disputed by Revenue and the defects being not curable, we are of the opinion that in view of the factual and legal reasoning rendered above, there is no requirement for us to set aside the additional ground to the file of the learned CIT (Appeals) for consideration. Since we have cancelled the penalties levied u/s.271(1)(c) of the Act for Assessment Years 2007-08 to 2009-10 in the case on hand on the basis of our adjudication of the preliminary issue of the validity of the defective notices issued under Section 274 rws 271 of the Act dt.29.12.2011 as raised in additional Grounds raised in the other grounds become academice. - Decided in favour of assessee. - I. T. A. Nos.313 to 315/Bang/2014 - - - Dated:- 14-8-2015 - SHRI GEORGE GEORGE K, AND SHRI JASON P. BOAZ, JJ. For The Appellant : Shri Narendra Sharma, Advocate. For The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as under :- Asst. Year Returned Income Revised/Returned (Rs.) Assessed Income (Rs.) Order Under Section Date of order. Asst. Year Returned Income Revised/Returned (Rs.) Assessed Income (Rs.) Order Under Section Date of order. 2007-08 84,73,277 86,23,280 143(3) rws 147 29.12.2011 2008-09 80,45,998 81,96,000 143(3) rws 147 29.12.2011 2009-10 27,45,905 28,95,900 143(3) 29.12.2011 2.3 Consequent to the passing of orders of assessment for Assessment Years 2007-08 to 2009-10 dt.29.11.2011, the Assessing Officer took up penalty proceedings under Section 271(1)(c) of the Act for these three assessment years which were initiated by issue of separate notices under Section 274 rws 271 of the Act dt.29.12.2011 along with the orders of assessment for the aforesaid three assessment years. The Assessing Officer was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the appeal may be allowed in the interest of justice and equity. 3.2 In the course of hearing of these appeals, the learned Authorised Representative filed the following identical additional grounds of appeal for all the three for Assessment Years 2007-08 to 2009-10 along with a prayer for admission of the same :- 1. The order confirming the penalty passed by the learned Commissioner of Income Tax (Appeals) III Bangalore, under section 271[1][c] of the Act, is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the Appellant s case. 2. The Appellant denies himself liable to the penalty of ₹ 28,12,034/- confirmed by the learned Commissioner of Income Tax (Appeals) III, Bangalore under section 271[1][c] of the Act under the facts and circumstances of case. 3. The learned Commissioner of Income Tax (Appeals) ought to have allowed the appeal of the appellant since the AO has passed the order without assumption of proper jurisdiction, as the mandatory conditions for invoking the provisions of section 271[1][c] of the Act has not been complied with under the facts and circumstances of the case. 4. The Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e specifically at S.Nos.3 and 5 thereof; is a preliminary issue challenging the validity of the orders imposing penalty under Section 271(1)(c) of the Act for all the three assessment years 2007-08 to 2009-10, in view of defective notices issued by the Assessing Officer under Section 274 rws 271 of the Act dt.29.12.2011 for the aforesaid assessment years. In this regard, the learned Authorised Representative for the assessee filed before us copies of the notices issued under Section 274 rws 271 of the Act dt.29.12.2011 issued by the Assessing Officer for initiating penalty proceedings for Assessment Years 2007-08 to 2009-10. It was brought to our notice that in the show cause notices issued to the assessee under Section 274 rws 271 of the Act, the Assessing Officer has not spelt out as to whether the assessee has concealed the particulars of his income or furnished inaccurate particulars of his income. The learned Authorised Representative drew the attention of the Bench to the said notices and to the fact that the Assessing Officer has placed a tick mark in the paragraph concealed particulars of your income or furnished inaccurate particulars of such income without deleting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on an illegal notice is void-ab-initio and would have no legs to stand on. In respect of the submissions of the learned Departmental Representative for the additional grounds to be set aside for consideration by the learned CIT (Appeals), the learned Authorised Representative vehemently opposed the same. It was contended that the issue regarding the validity of the defective notices issued under Section 274 rws 271 of the Act is a jurisdictional matter, which is not a curable defect as per the statute and also the decision of the Hon ble High Court of Karnataka in the case of CIT V Manjunatha Cotton Ginning Factory reported in 359 ITR 565 and therefore all the facts and the legal matrix being available before the Tribunal for its decision, no purpose would be served by remanding the additional ground to the file of the CIT (Appeals). 4.4.1 We have heard the rival contentions and perused the material on record on the issue of the additional grounds raised by the assessee challenging the validity of the impugned penalty order levying penalty u/s.271(1)(c) of the Act for the Assessment Years 2007-08 to 2009-10 on the basis of defective notices issued by the Assessing Officer u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, if the existence of the conditions could not be discerned from the said order and if it is a case of relying on deeming provision contained in Explanation-1 or in Explanation- 1(B), then though penalty proceedings are in the nature of civil liability, in fact, it is penal in nature. In either event, the person who is accused of the conditions mentioned in Section 271 should be made known about the grounds on which they intend imposing penalty on him as the Section 274 makes it clear that assessee has a right to contest such proceedings and should have full opportunity to meet the case of the Department and show that the conditions stipulated in Section 271(1)(c) do not exist as such he is not liable to pay penalty. The practice of the Department sending a printed farm where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law when the consequences of the assessee not rebutting the initial presumption is serious in nature and he had to pay penalty from 100% to 300% of the tax liability. As the said provisions have to be held to be strictly construed, notice issued under Section 274 should satisfy the grounds which he has to meet specifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pai reported in 292 ITR 11 at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 171 Taxman 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. 09. The final conclusion of the Hon ble Court was as follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computation of his total income have been disclosed by him, no penalty could be imposed. n) The direction referred to in Explanation IB to Section 271 of the Act should be clear and without any ambiguity. o) If the Assessing Officer has not recorded any satisfaction or has not issued any direction to initiate penalty proceedings, in appeal, if the appellate authority records satisfaction, then the penalty proceedings have to be initiated by the appellate authority and not the Assessing Authority. p) Notice under Section 274 of the Act should specifically state the grounds mentioned in Section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income q) Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law. r) The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. s) Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law. t) The penalty proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the additional grounds in this regard are not required to be set aside to the file of the learned CIT (Appeals) as requested by the learned Departmental Representative. The fact that it is clear that the impugned notices under Section 274 rws 271 of the Act dt.29.12.2011 do not have the appropriate portions marked to specify as to whether the penalty is proposed to be levied for concealment of income or for furnishing of inaccurate particulars of income; which fact has not been disputed by Revenue and the defects being not curable, we are of the opinion that in view of the factual and legal reasoning rendered above, there is no requirement for us to set aside the additional ground to the file of the learned CIT (Appeals) for consideration. 4.5.2 As regards the decision cited by the learned Departmental Representative CIT V Tolaram Hassomal (298 ITR 22) (MP), the co-ordinate bench of this Tribunal in the case of Smt. K. R. Prabhavati in M.P. No.5/Bang/2014 (in ITA No.234/Bang/2011) had occasion to examine the said decision. The co-ordinate bench in its order dt.10.4.2015 observed that it is not the decision of the jurisdictional High Court by the Hon ble High Court of Karnatak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 135 CTR 379 held that additional ground requiring no appreciation of facts, Tribunal should have permitted the assessee to raise the question. It was observed that eventual destination of every litigation is justice and as such technicality should not be 12 permitted to prevail as a speed breaker in the case of dispension of justice. Similar view has been taken by the Hon ble High Court of Madhya Pradesh in the case of Bhopal Sugar Mills Limited; 233 ITR 429 wherein it was held that there is no prohibition on the power of the Tribunal to entertain an additional ground which according to the Tribunal arises in the matter and for just decision of the case. In view of the above discussion and decision of the Hon ble Supreme Court in the case of National Thermal Power (supra) and the latest decision of the Hon ble jurisdictional High Court in the case of Turquise Investment Finance Limited (supra), which was after the date of decision cited by the learned CIT DR in the case of Tolaram Hassomal (supra), we 13 are inclined to follow the latest decision of the Hon ble jurisdictional High Court decided after considering the decision of Hon ble Supreme Court reported at 267 ITR 654. As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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