TMI Blog2017 (7) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the revenue under Section 271(1)(c) of the Act of 1961, the specific ground which forms the foundation therefor has to be spelt out in clear terms. Otherwise, an assessee would not have proper opportunity to put forth his defence. When the proceedings are penal in nature, resulting in imposition of penalty ranging from 100% to 300% of the tax liability, the charge must be unequivocal and unambiguous. When the charge is either concealment of particulars of income or furnishing of inaccurate particulars thereof, the revenue must specify as to which one of the two is sought to be pressed into service and cannot be permitted to club both by interjecting an or between the two, as in the present case. This ambiguity in the show-cause notice is further compounded presently by the confused finding of the Assessing Officer that he was satisfied that the assessee was guilty of both. - Decided against revenue - I.T.T.A. No. 684 of 2016 - - - Dated:- 13-7-2017 - Sanjay Kumar And Gudiseva Shyam Prasad, JJ. For the Appellant: Smt. M.Kiranmayee and Sri J.V.Prasad For the Respondent : Sri R.Raghunandan and Sri T.Bala Mohan Reddy JUDGMENT ( Per Sri Justice Sanjay Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he total disallowance therefore worked out to ₹ 54,74,678/-. Upon verification of the assessees bank account, it was found that there was a deposit of ₹ 15,60,000/- on 31.03.2010 for which the assessee failed to produce verifiable or credible evidence of a source. The same was therefore treated as unexplained credit/deemed income as per the provisions of Section 68 of the Act of 1961 and assessed as such. In consequence, the assessee was visited with a penalty notice under Section 271(1)(c) of the Act of 1961 on 22.03.2013. The assessee submitted letter dated 17.09.2013 citing the following reasons in support of her plea to drop the penalty proceedings: 1. Disallowance with regard to interest on borrowed capital was on agreed basis. 2. Regarding unexplained cash credit deposit, she was not in a position to establish the source with strict proof of evidence. 3. There is no positive establishment of concealment and she had accepted the additions made for want of strict proof of evidence and to buy peace with the department and also to avoid protracted litigation. However, vide order dated 24.09.2013, the Deputy Commissioner of Income Tax, Circle-3( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndicated she was fully aware as to what was the allegation leveled against her. Learned counsel would point out that in her reply to the show-cause notice, the assessee sought to explain the lapses on her part which evidenced her awareness as to the exact allegations made against her in the said show-cause notice. Learned counsel would therefore argue that raising the issue of lack of clarity in the show- cause notice for the first time before the Tribunal was an afterthought and that the Tribunal ought not to have given the assessee the benefit of doubt in this regard. Per contra, Sri R.Raghunandan, learned senior counsel representing Sri T.Bala Mohan Reddy, learned counsel for the assessee, would rely upon the decisions of the Karnataka and Gujarat High Courts and assert that when penal proceedings are initiated under Section 271(1)(c) of the Act of 1961, an assessee must be made aware in no uncertain terms as to what is the specific allegation which forms the basis for the proposed penalty. A copy of the proforma notice under Section 271 read with Section 274 of the Act of 1961 addressed to the assessee on 22.03.2013 is produced. Perusal thereof reflects that the irrelevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of particulars of income or furnishing of inaccurate particulars of income, the Bench observed that some cases may attract both the offences and in some, there may be overlapping of both, but in such cases initiation of the penalty proceedings must be specifically for both the offences. Drawing up penalty proceedings for one offence and finding the assessee guilty of another or finding him guilty for either, the one or the other, was held to be unsustainable in law. In COMMISSIONER OF INCOME TAX, GUJARAT-III V/s. MANU ENGINEERING WORKS [1980] 122 ITR 306 (GUJ), a Division Bench of the Gujarat High Court observed that the Assessing Officer must give a positive finding as to whether there is concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by the assessee. In the event there was no such clear-cut finding, the penalty order was held liable to be struck down. Smt.Kiranmayee, learned counsel, placed reliance on the judgment of the Supreme Court in K.P.MADHUSUDHANAN V/s. COMMISSIONER OF INCOME TAX, COCHIN (2001) 6 SCC 665 = AIR 2001 SC 2704 = 2001 LawSuit(SC) 1093. Therein, the Supreme Court held that it is not necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articular manner while imposing the penalty or reduce it to writing. That is not the controversy in the case on hand. On principle, when penalty proceedings are sought to be initiated by the revenue under Section 271(1)(c) of the Act of 1961, the specific ground which forms the foundation therefor has to be spelt out in clear terms. Otherwise, an assessee would not have proper opportunity to put forth his defence. When the proceedings are penal in nature, resulting in imposition of penalty ranging from 100% to 300% of the tax liability, the charge must be unequivocal and unambiguous. When the charge is either concealment of particulars of income or furnishing of inaccurate particulars thereof, the revenue must specify as to which one of the two is sought to be pressed into service and cannot be permitted to club both by interjecting an or between the two, as in the present case. This ambiguity in the show-cause notice is further compounded presently by the confused finding of the Assessing Officer that he was satisfied that the assessee was guilty of both. We are therefore of the opinion that the order under appeal does not brook interference on any ground. We find no questio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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