TMI Blog2015 (10) TMI 2006X X X X Extracts X X X X X X X X Extracts X X X X ..... D.R) ORDER Per Bench : These are five appeals, three by the assessee and two by revenue, directed against the order of the Commissioner of Income Tax (Appeals), LTU, Bangalore dt.27.6.2014 substantially confirming the levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961 (in short 'the Act') by the Assessing Officer for Assessment Years 2006-07 to 2008-09, with partial relief to the assessee. The assessee is in appeal on the issues on which the levy of penalty is confirmed for all the three assessment years and the revenue is in appeal on those issues on which the penalty was cancelled for Assessment Years 2006-07 and 2008-09. 2. The facts of the case, briefly, are as under :- 2.1 The assessee, a public sector bank, is a subsidiary of SBI and governed by the State Bank of India (Subsidiary Banks) Act, 1959. The assessee s returns of income for the relevant assessment years 2006-07 to 2008-09 were taken up for scrutiny and the assessments were completed under Section 143(3) of the Act; wherein the total income was computed by making various additions/disallowances to the income returned. The Assessing Officer also initiated penalty proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals by Revenue S.No. Issue Penalty levied u/s.271(1)(c). Rs. A.Y. 2006-07 A.Y. 2008-09 1. Delay in remittance and non-deduction of TDS 18,26,077 --- 2. Provision for LFC/HTC, Silver Jubillee Awards and Resettlement Expenses. ---- 2,12,85,488 3. In the course of appellate proceedings, the assessee vide letter dt.13.7.2015 has raised an identical additional ground for Assessment Years 2006-07 to 2008-09 which is as under :- Ground No.4 : Penalty proceedings null and void-ab-initio. a. The penalty proceedings initiated were null and void, ab-initio, as the notice issued initiating the penalty proceedings suffered from incurable defect, vitiating the penalty proceedings. b. The initiation of penalty proceedings does not satisfy the requirement of assuming jurisdiction to initiate the proceedings. 3.1 The learned Authorised Representative was heard on the additional ground raised in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld therefore be admitted and adjudicated upon by the Tribunal. 3.4.1 We have heard both parties on the additional ground raised by the assessee in the appeals for Assessment Years 2006-07, 2007-08 and 2008-09, perused and carefully considered the material on record; including the judicial decisions cited and placed reliance upon. We find that, on exactly similar circumstances, the co-ordinate bench of this Tribunal in the case of Roadlinks India Pvt. Ltd. (supra) has held that the additional ground raised is a purely legal ground and since it goes to the very root of the matter relating to the levy of penalty under Section 271(1)(c) of the Act, it was admitted for consideration and adjudication. The relevant portion of the said order at para 5.1 thereof is extracted hereunder :- 5.1 We have heard both parties and perused and carefully considered the material on record. We find that the additional ground raised by the assessee is a purely legal ground and since the same goes to the very root of the matter relating to levy of interest under Section 271(1)(c) of the Act, we therefore admit the same for consideration and adjudication in this appeal. 3.4.2 Further, the Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal. The said order has been affirmed by the Hon'ble Apex Court in 168 Taxmann 107. 3.4.5 The Indore Bench of the Tribunal in the case of Basantilal Jain in IT(SS)A No.64/Ind/2007 has examined both the aforesaid decisions of the Hon'ble Madhya Pradesh High Court and at para 4 of its order held that :- 4 . Hon ble High Court of Madhya Pradesh in 11 the case of Either Motors reported in 293 ITR 464 have held that additional grounds can be raised before the ITAT even if not raised before the Assessing Officer or the learned Commissioner of Income tax (Appeals). Accordingly, the Tribunal was justified in permitting the assessee to raise additional grounds of appeal even through the issue was not raised before the Assessing Officer or the learned Commissioner of Income tax (Appeals). Similarly, Hon ble Madhya Pradesh High Court in the case of Steel Ingots; 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned notice issued under section 274 r.w.s. 271 of the Act dt.31.12.2009 (a copy of which has been placed at pages 7 8 of the learned Authorised Representative s paper book submitted on 10.4.2014) it is in the prescribed form with the blank spaces to be filled up with relevant information and also at the bottom of page 2 of the notice, it is mentioned that inappropriate words and paragraphs are to be deleted. We, however, find that the Assessing Officer except for mentioning the assessment year and striking off para 2 on page 1 of the notice has neither filled up any of the blanks nor struck off any other inappropriate words or portions or paragraphs. Para 4 of the notice on page 2 thereof mentions both concealment of particulars of income as well as furnishing of inaccurate particulars of such income. The Assessing Officer has not specified as to which of the conditions for initiating the impugned penalty has been fulfilled. The Hon'ble Karnataka High Court in the case of CIT V Manjunatha Cotton Ginning Factory (supra) at paras 59 to 91 of the order has considered this issue at length and has held that the clause ( c ) ( viz. para 4 on page 2 of the notice) of the printed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 specifically. Otherwise, principles of natural justice is offended if the show cause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee. 60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two offences but in such cases the initiation of the penalty proceedings also must be for both the offences. 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 opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence as to non-application of mind. 4.3.3 We find that in the case before us also, the Assessing Officer has not specified the relevant portion of the clause ( c ) of the notice under section 274 r.w.s. 271 of the Act for initiating penalty proceedings under section 271(1)(c) of the Act and therefore, as held by the Hon'ble High Court in the case of Manjunatha Cotton Ginning Factory (supra), the assessee could not have rebutted the initial presumption for initiation of penalty proceedings, which is serious in nature. Respectfully following the decision of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton Ginnning Factory (supra), we hold that the notice issued under section 274 r.w.s. 271 of the Act dt.31.12.2009 for initiating penalty proceedings under section 271(1)(c) of the Act, in the case on hand, is invalid. The contention of the learned Departmental Representative that it is only a curable defect is also not acceptable since the Assessing Officer gets jurisdiction to levy the impugned penalty only by issuance of a valid notice and therefore when jurisdiction is not validly invoked, then the consequent proceedings are also not valid. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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