TMI Blog2017 (2) TMI 1127X X X X Extracts X X X X X X X X Extracts X X X X ..... ing two questions. But, in our view, the only point that arises for consideration is as under: 'Whether the notice issued u/s. 274 r.w.s. 271[1][c] of the Act in printed form without specifying grounds of initiation of penalty proceeding is valid, legal and tenable in law? 2. We have heard Smt. Prathibha, learned Counsel appearing for the appellant and Sri. K.V. Aravind, learned Counsel appearing for the respondent. 3. The other facts pertaining to the assessment and for penalty imposed under section 271B of the Income Tax Act, 1961 [hereinafter referred to as 'the Act'] are not the subject matter in the present appeal and therefore we do not find it appropriate to refer to the same. The only question to be considered is pertaining to the penalty imposed and confirmed by the Tribunal under Section 271[1][c] of the Act and therefore the facts if any will be required to be considered to that extent. 4. We may record that the Tribunal in the impugned order at paragraphs 4 to 6 has observed thus: 4. On 30.12.2010, notice was issued to the assessee proposing levy of penalty u/s. 271[1][c] of the Act. Contention of the assessee was that he had cooperated w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ONER OF INCOME TAX vs. MANJUNATHA COTTON GINNING FACTORY reported at [2013] 359 ITR 0565 and the subsequent decision of this Court in the case of 'COMMISIONER OF INCOME TAX vs. SHRI MUNINAGA REDDY' dated 21.9.2016 rendered in ITA No.5/2014 following the earlier decision of this Court in the case of MANJUNATHA COTTON GINNING FACTORY [supra]. It is submitted that the notice is non specific about concealment of income nor is specific for furnishing of inaccurate particulars of the income and therefore the Tribunal could not maintain the penalty under section 271[1][c] of the Act. 7. We may record that this Court in the later decision in the case of MUNINAGA REDDY [supra] in ITA No.5/2014 had observed thus: The appellants - revenue has preferred the present appeal by raising the following substantial question of law. Whether on the facts and in the circumstances of the case, the Tribunal is right in setting aside the penalty order even though the ingredients of Section 271(1) (c) are satisfied in the case of assessee and assessee had paid tax after unearthing of the income by Revenue in the survey conducted under Section 133A of the I.T.Act.? 2. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of penalty. The matter was further carried before the Appellate Tribunal. Appellate Tribunal by the impugned order dated 13.01.2015 on the aspects of penalty made the following observations at paragraph 6.4.1. to 6.4.7 as under: 6.4.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial decisions cited. It is not in dispute and clearly evident that the assessee has not been able to furnish any evidence at all to substantiate the claim of expenditure incurred on cost of improvement. As point out by the authorities below, the assessee was even unable to furnish any details like the parties to whom the payments were made; even if he was unable to give the full and correct details. In the absence of any evidence, we are unable to accept the contentions of the assessee on the claim of incurring cost of improvement. The onus on the assessee to establish the claim of expenditure incurred, has not been discharged. 6.4.2.On the issue of whether the failure to discharge the onus of proving the claim of expenditure being incurred would entail levy of penalty u/s. 271(1)(c) of the Act, it is settled principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is actually concealment of income or non-disclosure of the particulars of income, penalty cannot be levied as the assessee has made a complete disclosure in the return of income. In the case on hand, however, the penalty has been levied because the assessee could not furnish any evidence for the claim in the return of income of expenditure having been incurred and therefore the disclosure made in the return of income remains unsubstantiated. In our view, there is no surmise or conjecture involved in the levy of penalty in the assessee's case. Therefore, the facts of the cited case are different and the cited decision would be of no help to the assessee. 6.4.5 In the case of Manjunatha Cotton Ginning Factory (supra) of the Hon'ble Karnataka High Court, it was held that merely because assessee agreed for the addition and the assessment order passed on the basis of this addition, in the absence of any material on record to show concealment of income, it cannot be referred that the said addition is on account of concealment of income. In the case on hand, the penalty has not been levied because the addition was an agreed addition but because the assessee could not furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he attention of Tribunal was brought to the decision of this Court in the case of COMMISSIONER OF INCOME-TAX AND ANOTHER vs. MANJUNATHA COTTON AND GINNING FACTORY reported in [2013] 359 ITR 565 (KAR) (supra). However, Tribunal did not accept the contention of the assessee by examining the facts to the extent that the penalty has not been levied because the addition was an agreed addition but because the assessee could not furnish any evidence to substantiate its claim for having incurred the expenditure, the Tribunal held that decision of this Court in the case of COMMISSIONER OF INCOME-TAX AND ANOTHER vs. MANJUNATHA COTTON AND GINNING FACTORY reported in [2013] 359 ITR 565 (KAR) (supra) would not be applicable to the case on hand. 7. We may record that during the course of hearing the learned counsel for the appellant has tendered the copy of notice issued to the assessee under Section 271(1)(c) of the Act dated 15.12.2008 for imposition of penalty, which as per the learned counsel for appellant was a part of record in the proceedings before the Tribunal. Learned counsel for the respondent - revenue is unable to dispute that notice dated 15.12.2008 was issued by the Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 offered, even though not substantiated by the assessee, but is found to be bonafide and all facts relating to the same and material to the computation of his total income have been disclosed by him, no penalty could be imposed. (n) The direction referred to in Explanation IB to Section 271 of the Act should be clear and without any ambiguity. (o) If the Assessing Officer has not recorded any satisfaction or has not issued any direction to initiate penalty proceedings, in appeal, if the appellate authority records satisfaction, then the penalty proceedings have to be initiated by the appellate authority and not the Assessing Authority. (p) Notice under Section 274 of the Act should spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice. No specific ground is mentioned in the subject notice and resultantly the principles of natural justice could be said as violated. 10. In our view, if the observations made by this Court in the above referred decision and more particularly clauses (p), (q) and (r) are considered, it was a case wherein the decision of this Court would apply and it cannot be said that the decision of this Court in the case of COMMISSIONER OF INCOME-TAX AND ANOTHER vs. MANJUNATHA COTTON AND GINNING FACTORY reported in [2013] 359 ITR 565 (KAR) (supra) would not apply. 11. In view of the aforesaid discussion, if the decision of this Court in case of COMMISSIONER OF INCOME-TAX AND ANOTHER vs. MANJUNATHA COTTON AND GINNING FACTORY reported in [2013] 359 ITR 565 (KAR) (supra) is considered, the resultant effect would be that the notice in question issued under Section 271(1)(c) for levy of penalty and consequently the penalty imposed, both would be unsustainable and cannot stand in the eye of law. 12. In the rectification power, the Tribunal at one point of time did observe that since a specific contention was not raised by the assessee before the Appellate Authority, it is a mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished inaccurate particulars of such income. The said notice would be against the decision of this Court in the case of M/s.Manjunatha Cotton and Ginning Factory (supra) and more particularly Clauses (P) and (Q) referred to in the above decision. The notice should specifically state that whether there is concealment of income or furnished the incorrect particulars of the income or both. Since there is no specific ground stated and the grounds available in both Sections 274 and 271(1)(c) are reiterated, this would show non application of mind. In any case, as there is no specific ground that there would be breach of principles of natural justice, the ultimate order of imposing of penalty even otherwise also cannot be sustained. 6. In any case, if the Tribunal found that it was a case where the penalty could not be sustained. Tribunal in facts of the present case found that the penalty cannot be imposed or penalty cannot be sustained in any case such would be a question of facts and it will not be a question of law which may arise for consideration in the present appeal. 7. In the circumstances, the appeal is meritless and is hereby dismissed. Whereas the issue on the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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