TMI Blog2017 (3) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... ed copy of the order dated 31.03.2014 passed u/s 271 (1) (c) of the Act for assessment year 2009-10 dropping penalty proceedings. Under such circumstances, it would not be logical to uphold the penalty in assessment year under appeal. - Decided n favour of assessee. - ITA Nos. 2078 & 2079/PUN/2014, ITA Nos. 2139 & 2140/PUN/2014 - - - Dated:- 24-3-2017 - SHRI R.K PANDA, AM AND SHRI VIKAS AWASTHY,JM For The Assessee : Shri S.N Puranik For The Revenue : Shri Mukesh Jha ORDER PER VIKAS AWASTHY, JM These four appeals, two by the assessee and two by the Department are directed against the orders of Commissioner of Income Tax (Appeals), Aurangabad dated 17.09.2014 for assessment year 2007-08 and order of even date for assessment year 2008-09. These cross appeals by the assessee and the Department for the assessment year 2007-08 2008-09 are in respect of levy of penalty u/s 271 (1) (c) of the Income Tax Act, 1961 (hereinafter referred as the Act ). Since the issues in the appeals are arising from same set of facts, therefore, these appeals are taken up together for adjudication. 2. The brief facts of the case as emanating from the records are: The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 10,87,242/- 07 Loss of Sinhgad Urban Co operative Bank 16,16,187/- 08 Provisions for overdue interest reserve 17,40,000/- 09 Forfeited sundry Creditors amount directly credited to reserve fund 1,88,877/- 10 Provisions for Audit fees 1,19,277/- 11 Excess cash amount directly credited to reserve fund 20,547/- 12 Deduction claimed u/s 80P(2) 50,000/- 13 Service tax liability not paid before due date 653/- Total 3,03,36,809/- In respect of the additions made during assessment, the Assessing Officer levied penalty of ₹ 80,84,867/- u/s 271 (1) (c ) of the Act vide order dated 23.03.2013. 3. Against levy of penalty in both the assessment years, the assessee filed appeals before the Commissioner of Income Tax (Appeals). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty is to be levied for concealment of income or furnishing of inaccurate particulars of income. While issuing notice u/s 274 r.w.s 271 (1) ( c) of the Act for the assessment year 2008-09, again the Assessing Officer has mentioned that penalty proceedings are for concealment of particulars of income or furnishing of inaccurate particulars of income. The Assessing Officer has not struck off irrelevant limb of charge in the proforma notice. At the time of passing of the order levying penalty u/s 271 (1) ( c ) of the Act for assessment year 2008-09, the Assessing Officer has levied penalty for furnishing inaccurate particulars of income and concealment of income. 4.1 The ld. AR submitted that concealment of income and furnishing of inaccurate particulars of income are two different expressions having different connotations. Concealment of income and furnishing of inaccurate particulars of income are two different offences. The Assessing Officer has to be consistent and specific in mentioning charge for levy of penalty at the time of recording satisfaction and at the time of passing of order levying penalty. The ld. AR pointed that even the notice issued u/s 274 r.w.s 271 (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of penalty u/s 274 r.w.s 271 (1) (c ) of the Act in both assessment years does not clearly specify the charge for the levy of penalty. 7. A perusal of the assessment order dated 24.12.09 for the assessment year 2007-08 show that the Assessing Officer has recorded satisfaction for initiating penalty proceeding u/s 271 (1) (c ) of the Act for furnishing of inaccurate particulars of income . At the time of passing of the order u/s 271 (1) (c) of the Act, the Assessing Officer observed as under I am satisfied that the assessee bank has furnished inaccurate particulars of its income and it has concealed it s income and thereby made itself liable for levy of penalty under section 271 (1) ( c) of the Act The Assessing Officer while framing the assessment for assessment year 2008-09 vide order dated 24.12.10 has recorded satisfaction for initiating penalty proceedings u/s 271 (1) ( c) of the Act i.e for each and every addition. The Assessing Officer while recording satisfaction for levying penalty used stereotype expressions for each addition. The same reads as under : Penalty proceedings u/s 271(1) ( c) of the Act are separately initiated for furnishing inaccura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g has been shown to us in the present facts which would warrant our taking a view different from the Karnataka High Court in the case of Manjunath Cotton Ginning Factory ( supra). 10. The Hon ble Karnataka High Court in the case of CIT Vs. Manjunath Cotton Ginning Factory (supra) reported in 359 ITR 565 has held: 59. As the provision stands, the penalty proceedings can be initiated on various grounds 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 discerned from the said order and if it is a case of relying on deeming provision contained in Explanation 1 or in Explanation 1(B), then though penalty proceedings are in the nature of civil liability, in fact, it is penal in nature. In either event, the person who is accused of the conditions mentioned in section 271 should be made known about the grounds on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained. 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 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 particulars. The apex court in the case of Ashok Pai reported in [2007] 292 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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