TMI Blog2015 (10) TMI 2164X X X X Extracts X X X X X X X X Extracts X X X X ..... as imposed on the assessee by the AO are as follows. 3. The assessee is an individual. He is engaged in the business of executing civil engineering contracts. The assessee claimed exemption u/s. 54F of the Act in respect of capital gain on sale of a property at Bangalore. The said claim for exemption was found to be incorrect by the AO and accordingly the same was not allowed. In respect of the addition made by denying the claim of deduction u/s. 54F of the Act, the AO initiated penalty proceedings and imposed penalty on the assessee u/s. 271(1)(c) of the Act. 4. On appeal by the assessee, the CIT(Appeals) confirmed the order of AO, hence this appeal by the assessee before the Tribunal. 5. At the outset, the ld. counsel for the assessee drew our attention to ground No.3 raised by the assessee in the grounds of appeal, which reads as follows:- 3. The learned Assistant Commissioner of Income Tax, Circle 4(1), Bangalore has erred in levying penalty without specifying in the notice under section 271 read with section 274 whether the penalty is leviable for concealment of income or for furnishing of inaccurate particulars of income. 6. According to the assessee, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee on the ground that the same was not raised either before the AO or the CIT(Appeals). 8. We have considered the rival submissions. We are of the view that the issue raised in ground No.3 is purely a legal question and does not involve investigation of any new fact and can be decided on the basis of facts already on record. Keeping in view the decision of the Tribunal referred to above, we are of the view that the additional ground deserves to be admitted and the same is accordingly admitted. 9. As far as merits of ground No.3 raised by the assessee is concerned, the Hon ble Karnataka High Court in the case of CIT Anr. v. Manjunatha Cotton and Ginning Factory (supra) has laid down the following principles to be followed in the matter of imposing penalty u/s.271(1)(c) of the Act. NOTICE UNDER SECTION 274 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 sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Assessment Officer to initiate the proceedings because of the deeming provision contained in Section 1(B). h) The said deeming provisions are not applicable to the orders passed by the Commissioner of Appeals and the Commissioner. i) The imposition of penalty is not automatic. j) Imposition of penalty even if the tax liability is admitted is not automatic. k) Even if the assessee has not challenged the order of assessment levying tax and interest and has paid tax and interest that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment order that, it is on account of such unearthing or enquiry concluded by authorities it has resulted in payment of such tax or such tax liability came to be admitted and if not it would have escaped from tax net and as opined by the assessing officer in the assessment order. l) Only when no explanation is offered or the explanation offered is found to be false or when the assessee fails to prove that the explanation offered is not bonafide, an order imposing penalty could be passed. m) If the explanation offe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
