TMI Blog2016 (12) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided in favour of assessee - ITA No.1476/Mum/2014 To ITA No.1481/Mum/2014 - - - Dated:- 21-10-2016 - SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER For The Appellant by : Shri Shri Sanjay Parikh For The Respondent by : Shri Mohammed Rizwan ORDER PER G.S.PANNU,A.M: These are six appeals by the assessee pertaining to assessment years 2005-06 to 2010-11 involving a common issue relating to levy of penalty under section 271(1)(c) of the Act. Since the facts and circumstances in all the appeals stand on similar footing, the appeal for assessment year 2005-06 is taken as the lead case. This appeal is directed against an order passed by CIT(A)-39, Mumbai dated 31/01/2014, which in turn, arises out of an order passed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 (in short the Act ) dated 26/09/2013. 2. In brief, the relevant facts are that the assessee is an individual, who is Executive Director of M/s. Ispat Industries Ltd., a flagship company of Ispat Group of cases, which was covered under a search action carried out by the Department under section 132(1) of the Act. The assessee was also cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return filed in response to notice issued under section153A was on account of the aforesaid interest income not offered to tax earlier. The Ld. Representative for the assessee explained that nondisclosure of interest and other income in the original return of income filed by the assessee was on account of the staff of SAIL/Ispat Industries Ltd., who compiled the return of income filed by the assessee only on the basis of the salary certificate. The Ld. Representative for the assessee submitted that there was no justification for levy of penalty under section 271(1)(c) of the Act, inasmuch as, the income returned in the return filed in response to the notice issued under section 153A of the Act has been accepted as such. It was pointed out that there was no detection, either during the course of search or during the subsequent assessment proceedings carried out with respect to the return filed in response to notice issued under section 153A of the Act, which would show that assessee had either concealed or furnished inaccurate particulars of income within the meaning of section 271(1)(c) of the Act. 3.1 Notwithstanding the plea regarding the absence of merit for levy of penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grievance of the assessee is that the Assessing Officer levied penalty under section 271(1)(c) of the Act with respect to such difference. 5.1 The preliminary objection of the assessee is to the effect that the Assessing Officer initiated penalty proceedings under one limb of the provisions of section 271(1)(c) of the Act but ultimately it has been levied under another limb, which is impermissible. In this context, it would be pertinent to note that section 271(1)(c) of the Act, empowers the Assessing Officer to levy penalty, if he is satisfied that assessee has either concealed particulars of his income or furnished inaccurate particulars of such income. Quite clearly, the penalty under section 271(1)(c) of the Act is imposable in two situations, namely, either for concealment of the particulars of income or for furnishing inaccurate particulars of such income. The case made out by the assessee is that in the assessment order the Assessing Officer initiated penalty proceedings for concealment of particulars of income, whereas the penalty has been imposed for furnishing of inaccurate particulars of income, qua the income in question. In this context, we notice that in the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee 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 opportunity to meet those grounds. After, he places his version and 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 imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of income would not validate the imposition of penalty on the ground of concealment. Our Co-ordinate Bench in the case of Dharni Developers (supra) has also taken a similar view following the ratio of the judgment of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (supra). In fact, specifying the particular limb under which the assessee is to be penalized under section 271(1)(c) of the Act is of paramount importance as can be understood from the fact that in the case of SSA s Emerald Meadows: S.L.P(C) No.23272 of 2016, the Hon ble Supreme Court has on 5/8/2016 dismissed the SLP, which had arisen from the judgment of the Hon ble Karnataka High Court in ITA No.380 of 2015 dated 23/11/15, wherein the Hon ble Karnataka High Court following its earlier judgment in the case of Manjunatha Cotton and Ginning Factory(supra) held that the notice issued by the Assessing Officer under section 274 r.w.s. 271(1)(c) of the Act was bad in law as it did not specify in which limb of section 271(1)(c) of the Act penalty had been initiated i.e. whether for concealment of income or for furnishing of inaccurate particulars of income. No doubt, the case before ..... X X X X Extracts X X X X X X X X Extracts X X X X
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