TMI Blog2017 (3) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... y of 14 days on the part of the assessee in filing this appeal. In this regard, an application has been filed by the assessee seeking condonation of the said delay and keeping in view the reasons given therein, I am satisfied that there was a sufficient cause for the delay on the part of the assessee in filing this appeal before the Tribunal . Even the ld. D.R. has not raised any material argument in this regard. I, therefore, condone the said delay and proceed to dispose of this appeal of the assessee on merit. 3. I have heard the arguments of both the sides and also perused the relevant material available on record. The ld. counsel for the assessee before me has raised a preliminary issue challenging the validity of the penalty order passed by the Assessing Officer on the ground that in the absence of any specific mention in the show-cause notice issued under section 274 of the Act for the year under consideration by the Assessing Officer as to whether the asseessee is guilty of having furnished inaccurate particulars of income or of having concealed particulars of such income , the initiation of penalty proceedings itself was bad in law and the penal ty order passed in pur ..... 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 ..... sions 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 computati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons given above, we hold that levy of penalty in the present case cannot be sustained. We therefore cancel the orders imposing penalty on the Assessee and allow the appeal by the Assessee . 4. In my opinion, the decision of the Coordinate Bench of this Tribunal rendered in the case of Suvaprasanna Bhattacharya vs. - ACIT rendered vide its order dated 06.11.2015 in ITA No. 1303/KOL/2010 by relying on the decision of the Hon ble Karnataka High Court in the case of CIT Another vs. - Manjunatha Cotton Ginning Factory reported in 359 ITR 565 is clearly applicable in the present case and respectfully fol lowing the same, I hold that the show-cause notice issued by the Assessing Officer under section 274 for the year under consideration not being in accordance with law, the penalty order passed by the Assessing Officer in pursuance thereof is liable to be cancel led being invalid. I accordingly cancel the order passed by the Assessing Officer imposing penalty under section 271(1)(c) for the year under consideration and al low the appeal of the assessee. 5. In the result , the appeal of the assessee is al lowed. Order pronounced in the open Court on March 10, 2017. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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