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2016 (10) TMI 525 - ITAT MUMBAI

2016 (10) TMI 525 - ITAT MUMBAI - TM - Penalty under section 271(1)(c) - validity of notice - Concealment of income - Held that:- Respectfully following the decision of the Hon’ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT), we hold that the notice issued u/s. 274 r.w.s. 271(1)(c) of the Act dated 8/3/2013 for assessment year 2010-11 for initiating penalty proceedings under section 271(1)(c) of the Act in the case on hand i .....

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er of CIT(Appeals)-13, Mumbai dated 4/09/2014 confirming the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 ( in short the Act ) for the assessment year 2010-11. 2. The facts of the case as emanate from the record, briefly, are as under:- 2.1 The assessee, a company engaged in the business of producing, acquiring, marketing and distribution of music in India, filed its return of income for assessment year 2010-11 on 24/4/2011 declaring Nil income. The return was processed u/ .....

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3/2013. Subsequently, the Assessing Officer ( A.O ) vide order dated 20/9/2013, proceeded to levy penalty of ₹ 22,17,577/- under section 271(1)(c) of the Act for concealment of income on the aforesaid amount of ₹ 71,76,623/-. 2.2 On appeal, the Ld. CIT(Appeal)-13, Mumbai dismissed the assessee s appeal vide order dated 4/9/2014 and confirmed the levy of penalty under section 271(1)(c) of the Act for assessment year 2010-11. 3.1 Aggrieved by the order of the CIT(Appeals)-13, Mumbai da .....

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he appellant reserves its right to add to, alter, amend, modify or delete any of the grounds taken in this appeal. 4.1 Subsequently, by letter dated 3/2006, the assessee field additional grounds of appeal which read as under:- "On facts and circumstances of the case, the order of penalty u/s 271 (1)(c) of the Act is bad in law and void ab initio, as the notice issued u/s 274 r. w.s. 271 is not in accordance with law. From the notice, it is not discernible as to why penalty is initiated, whe .....

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r section 271(1)(c) of the Act are initiated (copy of the notice dated 8/3/2013 has been filed on record). The Ld. Representative for the assessee also placed before us copies of the decision of the Bangalore Bench of the Tribunal in the case of Roadlinks India Pvt. Ltd. vs. ACIT in ITA No.1485/Bang/2013 dated 27/2/2015 and of the Co-ordinate Bench of this Tribunal in the case of Sanghvi Savla Commodity Brokers Pvt. Ltd. vs. ACIT in ITA No.1746/Mum/2011 dated 22/12/2015, wherein in similar circu .....

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, we, therefore, admit the same for consideration and adjudication in this appeal. 4.4 Along with the application for admission of additional grounds, the assessee has also field a copy of the notice issued u/s. 274 of the Act dated 8/3/2013 for initiating penalty under section 271(1)(c) of the Act for assessment year 2010-11. A perusal of the said notice reveals that the Assessing Officer has not deleted the inappropriate words and parts of the notice, whereby it is not clear as to the default .....

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invalid and consequential penalty proceedings are also invalid. The relevant portion their Lordships judgment at paras 59 to 62, thereof are as under:- 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 .....

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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 conse .....

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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 c .....

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nly 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 .....

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e. 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 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 par .....

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e. 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. The conclusion drawn therein by their Lordships at para 63 thereof and particularly at p) to s) thereof are as under:- 63. .............................................. .....

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