TMI Blog2017 (9) TMI 1641X X X X Extracts X X X X X X X X Extracts X X X X ..... course of search, the assessee had also declared, inter alia, a sum of ₹ 50 lakhs as additional income in respect of the aforesaid jewellery found for asst. year 2011-2. The assessment was competed u/s 153A r.w 143(3) of the Act vide order dated 26/2/2013, wherein the assessee s income was determined at ₹ 114,42,43,772/- as against revised declared income of ₹ 23,97,25,547/- due to various additions made therein, In the order of assessment the Assessing Officer ( AO ) observed that the assessee had only declared the sum of ₹ 50 lakhs on account of unexplained jewellery as per the declaration u/s 132(4) of the Act in the return of income filed for asst. year 2011-2; but had not disclosed the balance ₹ 6,74,320/- in respect of unexplained jewellery found and valued at the time of search. In that view of the matter, the AO inter alia, made an addition of ₹ 6,74,320/- to the income of the assessee in respect of the jewellery found. 2.2 In further appeals before appellate authorities, in respect of the additions made in the order of assessment dated 26/2/2013 for asst. year 2011-2, this addition of ₹ 6,74,320/- in respect of jewellery was up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educed substantially. 7. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs. 4. Grounds 1,6 7 are general in nature and not being urged before us, are dismissed as infructuous. 5. Grounds No:2 and 3 5.1 In these grounds (Supra), the sum and substance of the assessee s contentions are that the penalty proceedings initiated by the AO vide notice issued u/s 274 r.w.s 271 of the Act dated 26/2/2013 for levy of penalty u/s 271(1)(c) of the Act, is defective. In this regard the ld AR for the assessee has placed reliance on the decision of the Hon ble Karnataka High Court in the case of Manjunatha Cotton Ginning Factory (359 ITR 565) (Kar) and the rejection of the Revenue s SLP by the Hon ble Apex Court in the case of SSAS Emerald Meadows in SLP: (CC 11485/2016) dated 5/8/2016. The ld AR also filed a copy of the decision of the coordinate bench of this Tribunal in the case of Shri Moorsavirappa C Batli in ITA No.668/Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articulars of income or concealing particulars of income for which penalty u/s 271(1)(c) of the Act is sought to be levied. 5.3.2 The Hon ble Karnataka High Court in the case of M/s Manjunatha Cotton Ginning Factory in (359 ITR 565) (Kar) has held that a notice issued u/s 274 r.ws 271 of the Act without specifying the nature of default; i.e; whether the notice is issued for concealment of particulars of income or furnishing of inaccurate particulars of income; is invalid and the consequential penalty proceedings/order are also not valid. The relevant portion of the aforesaid judgment of the Hon ble Karnataka High Court (Supra) at paras 59 to 61 are extracted hereunder:- 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 discer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 clause (c). C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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