9911796707
TMI Blog2017 (12) TMI 1263X X X X Extracts X X X X X X X X Extracts X X X X ..... s ground was not raised before the lower authorities and it was raised only for the first time before the Tribunal the same may not be admitted. 4. On hearing both the parties and on perusal of the additional grounds raised by the assessee we find that the additional grounds were raised questioning the validity of the penalty order passed u/s. 271(1)(c) of the Act is bad in law and not sustainable for the reason that the notice was issued mechanically without specifying any charge. Since, the additional ground is a legal matter and the very basis for levying penalty was questioned, we admit the additional grounds. 5. Ld. Counsel for the assessee referring to the Assessment Order for the Assessment Years 2005-06 & 2006-07 submits that the Assessing Officer has not mentioned on what charge the penalty was initiated. Ld. Counsel for the assessee submits that the Assessing Officer simply stated that he is satisfied that the income of the assessee falls within the purview of the section 271(1)(c) of the Act and therefore penalty proceedings u/s. 271(1)(c) r.w. Explanation thereon are initiated in respect of the undisclosed income of the assessee. 6. Similarly referring to the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be levied on existence of any of the two situations, namely for concealment of particulars of income or for furnishing inaccurate particulars of such income. "Concealment of particulars of income and "furnishing of inaccurate particulars of income" referred to in Section 271(1)(c) denote two different connotations. Therefore, it is imperative for the Assessing Officer to make the assessee aware in the notice issued under section 274 read with section 271(1)(c) as to which of the two limbs are being put up against him for the purposes of levy of penalty under section 271(1)(c). Unless the assessee is made aware of the specific charge against him, it would be violative of the principles of natural justice inasmuch as the assessee would not be in a position to put up his defense appropriately. The Assessing Officer recorded that the penalty proceedings under section 271(1)(c) were initiated for concealment of income while in the notice issued under section 274 read with section 271(1)(c), both the limbs of section 271(1)(c) were left intact in the standard printed notice, as the irrelevant clause had not been struck off. This contradiction in the Assessment Order vis-à-vis the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon'ble High Court by referring to the judgment of the Hon'ble Supreme Court in the case of T. Ashok Pai, 292 ITR 11 (SC). It was further noted that the judgment in the case of T. Ashok Pai (supra) has been relied upon by the Hon'ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory & Ors., 359 ITR 565 (Karn.). The Hon'ble High Court approved the proposition that once the two limbs contained in the notice u/s 274 r.w.s. 271(1)(c) of the Act, namely concealment of income and furnishing of inaccurate particulars of income are understood to be carrying different meanings/connotations, non-striking off of the irrelevant clause or striking off one of the limbs and imposing penalty on the other limb is not as per law. Thirdly, it may be noted that the issue before the Hon'ble High Court was incorrect mentioning of charge in the show cause notice, but the case before us is of non-mentioning of the charge at all. Therefore, for all the above reasons, non-striking off of the irrelevant clause in the notice issued u/s 274 r.w.s. 271(1)(c) of the Act cannot be said to be a mere wrong labelling of the section or some mistake of the nature that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 irrelevant contents therein, which had no application to the assessee, were struck out leaving only one clause which reads as under: 'Whereas in the course of proceedings before me for the Assessment Year 2010-11 it appears to me that you have concealed the particulars of your income or furnished inaccurate particulars of such income.' It would be apposite at this stage to consider the judgment of the Karnataka High Court in M/s.MANJUNATHA COTTON AND GINNING FACTORY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ONER OF INCOME TAX, GUJARAT-III V/s. MANU ENGINEERING WORKS, 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. Therein, the Supreme Court held that it is not necessary for the Assessing Officer, while issuing a notice under Section 271(1)(c), to expressly invoke Explanation 1(B) appended to the provision. It is however relevant to note that Explanation 1(B) merely adverts to a case of failure of an assessee to substantiate the explanation offered whereby the amount added or disallowed while computing the total income of such person for the purposes of the penalty provision shall be deemed to represent the income in respect of which particulars had been concealed. The Supreme Court observed that the statutory provision included ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
