TMI Blog2016 (7) TMI 616X X X X Extracts X X X X X X X X Extracts X X X X ..... carried out by the assessee u/s 132 of the Act in the doctors group of cases. The assessee was one such person who was searched. The assessee is engaged in the business of rendering services relating to infertility and reproductive therapy. In response to the notice u/s 153A of the Act consequent to the search the assessee filed return of income declaring total income of ₹ 4,90,510/-. The assessment was completed by AO accepting the total income returned by the assessee. In respect of the difference between income declared in the original return of income and the income filed in the return filed u/s 153A of the Act, namely ₹ 2,76,000/- (4,90,510/- - 2,14,510/-) which was the sum added in the assessment u/s 153A of the Act, the AO imposed penalty on the assessee u/s 271(1)(c) of the Act and the same was confirmed by CIT(A). Both AO and CIT(A) have relied on Explanation 5A to section 271(1)(c) of the Act for coming to the conclusion that the assessee was liable to pay penalty. 4. Aggrieved by the order of CIT(A) the assessee has preferred the present appeal before the Tribunal. 5. We have heard the submissions of the ld. Counsel for the assessee and the ld. DR. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted form where all the grounds given in section 271 are given would not satisfy the requirement of law. The Court has also held that initiating penalty proceedings on one limb and find the assessee guilty in another limb is bad in law. It was submitted that in the present case, the aforesaid decision will squarely apply and all the orders imposing penalty have to be held as bad in law and liable to be quashed. 8.2 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 said order which contains the satisfaction of the authority which has passed the order. However, if the existence of the conditions could not be discern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 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 satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 bona fide, an order imposing penalty could be passed. m) If the explanation offered, even though not substantiated by the assessee, but is found to be bona fide and all facts relating to the same and material to the comp ..... 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