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Shri. S. Suryanarayana Versus Income-tax Officer, Ward – 4 (4) , Bengaluru

Penalty u/s 271(1)(c) - Held that:- It is imperative for the AO to show in the notice the default of assessee. Mere mentioning of the default in the assessment order may not be sufficient. Notice issued to the assessee does not specify the default of the assessee. In our opinion, notice u/s.274 r.w.s.271 of the Act, issued for the impugned assessment year was invalid. Exconsequenti the penalty order is set aside. - Decided in favour of assessee. - I.T.A No.128/Bang/2015 - Dated:- 13-4-2016 - SHR .....

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ce issued initiating the penalty proceedings suffer from incurable defect. In support of this, assessee has filed a copy of the notice dt. 30.03.2013, issued u/s.274 r.w.s.271 of the Act. 03. Per contra, Ld. DR submitted that the levy of penalty for the impugned assessment year was for concealment of income. Ld. DR submitted that assessee had failed to disclose the correct income. There was clear concealment of income. According to him, vagueness of notice could not be considered as a reason for .....

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otice has to specify whether there was concealment of particulars of income or furnishing of inaccurate particulars of income. If there are both, it is the duty of the AO to specify so. Hon ble jurisdictional High Court in the case of CIT v. M/s. Manjunatha Cotton & Ginning Factory (359 ITR 565) held as under at paras 15 to 17 : 15. The first legal question is whether the notice u/s 274 r.w.s.271 is valid. The learned DR s objection is that the assessee has not raised any specific ground of .....

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n of sec.271(1)(c ) of the Act? One of the mandatory conditions is that he notice u/s 274 r.w.s. 271 must be valid notice. In view of the same, we proceed to adjudicate this ground of appeal. 16. As seen from the notice issued u/s 271(1)(c) of the IT Act, it is dated 29-03-2002 addressed to the assessee for the assessment year 1998-99. It is in the prescribed form with the blanks to be filled up by the relevant information. At the bottom of the notice on page-2, it is mentioned that inappropriat .....

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the case of CIT v. M/s Manjunatha Cotton & Ginning Factory (2013) page 93 para 59 to 61 has considered this issue at length and has held that clause(c ) of the printed form of notice u/s 274 deals with two satisfactions i.e. concealment of particulars of income or furnishing of inaccurate particulars of income. The Hon ble High Court has held that both the conditions are different and distinct though at times they may overlap with each other. It was held that AO while issuing notice u/s 274 .....

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e 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 u/s 274, the could conveniently refer to the said order which contains the satisfaction of the authority which has passed the order. However, 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(b), the .....

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not liable to pay penalty. The practice of the Department sending a printed form where as the ground mentioned in sec.271 are mentioned would not satisfy requirement of law when the consequence 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 u/s 274 should satisfy the grounds which he has to meet specifically. Otherwise, princ .....

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or both the offences. But drawing up penalty proceedings for one offence and finding the assessee guilty of another offence of finding him guilty for either the one or the other cannot be sustained in law. It is needless to pint satisfaction of the existence of the grounds mentioned in sec.271(1)(c) when it is a sine qua non for initiation or proceedings, the penalty proceedings should be confirmed only to those grounds and the said grounds have to be specifically stated to that the assessee wou .....

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d 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 the penalty must be determined with the reference to information, facts and materials in the hands of the authority imposing penalty at the t .....

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ssuing 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 pages 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat Court in the case of Manu Engineering reported in 122 ITR 306 and the be Delhi High Court in the case of Virgo Marketing reported in 171 Taxman 156 .....

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