TMI Blog2017 (8) TMI 1375X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Mohd. Javed, Sr. D.R. O R D E R O. P. MEENA AM. 1. These six appeals filed by the Assessee is directed against the separate orders of ld. Commissioner of Income tax (Appeals)- I, Indore, [in short referred to as the CIT (A)] each dated 30.04.2012. These appeals pertains to Assessment Years 2002- 03 to 2007-08, arisen from the penalty order passed under section 271(1) (c) of Income Tax Act, 1961 (herein after referred to as the Act ) by the Addl. CIT Range- 3(1), Indore dtd. 29-06- 2010 (hereinafter referred as the AO). These six appeals involve a common issue, arising out of the same set of facts and were heard together. As a matter of convenience, therefore, all the six appeals are being disposed of by way of this consolidated order. 2. While material facts of all these cases are the same, inasmuch as all the six appeals before us relates to the assessee Shri Kulwant Singh Bhatia who belongs to Bhatia Group of Indore, in which search and seizure operation carried out on 25 September 2007 at various business premises and residential premises. This group is engaged in the coal trading. We are taking up the appeal for the assessment year 2002-03, there findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. On the other hand, the Ld. Sr. D.R. opposed the admission of additional ground. 5. We have considered the facts and material on record. The additional ground being legal one, hence, admitted. Reliance is placed on the decision of Apex Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) : [1999] 157 CTR 249 (SC) wherein it was held as under: The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) takes too narrow a view of the powers of the Appellate Tribunal (vide, e.g., CIT v. Anand Prasad [1981] 128 ITR 388 (Delhi), CIT v. Karamchand Premchand P. Ltd. [1969] 74 ITR 254 (Guj) and CIT v. Cellulose Products of India Ltd. [1985] 151 ITR 499 (Guj) [FB]). Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 12,48,650/- including additional income of ₹ 9,28,400/-.The assessment was completed u/s. 153A on December 18, 2009 by accepting returned income under section 153A for A.Y. 2002-03. During the course of assessment proceedings, the AO noted that the assessee has shown additional income due to search hence, penalty proceeding under section 271(1) (c) were initiated for all the assessment years. Further, the AO noted that the assessee has offered an additional income of ₹ 9,28,400/- in the return of income filed u/s 153A. Since the said income was not declared in the return filed u/s 139, hence the AO initiated penalty proceedings u/s 271(1) (c) of the Act. The submissions filed by the assessee has been reproduced by the AO in the penalty order. The AO held that after insertion of Explanation 5A of Section 271(1)(c) with effect from 01.06.2007, the legal position is very clear and penalty for concealed income held to be levied. Since, the assessee has declared undisclosed income only after the date of search. Therefore, the fact that such income was offered u/s 132(4) during search proceedings does not take the assessee s case out of the clutches of the above dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exact charges against him and the case, which is required to meet out. A clear notice not only a statutory requirement but even for the purpose of principle of audi alteram partem which requires that no one should be condemned unheard, a notice in clear term specifying the clear charges against an assessee is required to be given by an Assessing Officer before imposing a penalty. It was submitted that by not striking off the inapplicable clause, the Ld. AO has left the matter open for a complete guess work on the part of the appellant for presuming charges leveled against him and in such situation, it cannot be said that an effective opportunity of being heard was given to the appellant as contemplated under section 274 of the Act. Thus, the penalty proceedings were initiated without specifying any particulars or specific charge against the assessee in either the assessment order or even the penalty notice. It is important to point out that no charge either of concealment of income or furnishing of inaccurate particulars was made in the assessment orders in all these cases. The learned counsel referred the assessment order and submitted that the perusal of the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Manjunatha Cotton Ginning Factory [2013] 359 ITR 565 (Karnataka), it has been held that the show cause notice u/s. 274 was defective as it does not spell out the grounds on which the penalty is sought to be imposed and consequently, penalty imposed was cancelled. The ld. Counsel for the assessee submitted that in the case of Asst. CIT v. M. P. State Tourism Development Corporation [2015] 26 ITJ 225 (Trib- Indore), this bench has held that the satisfaction of the AO about concealment of particulars of income of furnishing of inaccurate particulars of such income is essential before levying any penalty under section 271(1)(c). The ld. Counsel for the assessee also stated that in Dilip N Shroff v. JCIT [2007] 291 TTR 519 (SC) at para 83 and 84 it was observed that standard preforma used by the AO in issuing a notice without deleting inappropriate words tantamount to non application of mind and thereby it is not in accordance with principle of natural justice. With regard to observation of the CIT (A), that Explanation 5A to section 271(1) (c) are applicable, it was submitted that question of applicability would only arise when penalty proceedings are properly initiated by issuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed income is declared as result of search was not recorded in books of accounts before the date of search. We find that the penalty notices under section 274 read with section 271(1)(c)and u/s. 271AAA were issued in the typed format without the striking off either of the two charges i.e. * have concealed the particulars of your income or ..or furnished inaccurate particulars of income . Thus, the penalty proceedings were initiated without specifying any particular or specific charge against the assessee in either the assessment order or even the penalty notice. It is important to point out that no charge either of concealment of income or furnishing of inaccurate particulars was made in the assessment orders in all these cases. Further perusal of the assessment order reveals that it is simply stated that penalty proceedings are initiated u/s. 271(1)(c) and section 271AA. Thus, we find that the charge against which the penalty is to be levied was not specific. It is now a settled proposition that when the charge itself is not a specific and is vague, penalty cannot be levied. The Hon`ble Supreme Court in the case of T. Ashok Pai v. CIT (2007) 292 ITR 11 (SC) has laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16] 73 taxmann.com 248 (SC). The learned counsel also submitted that even in the matter of search case where penalty is levied under Explanation 5A to section 271(1)(c), following decision of CIT v. Manjunatha Cotton Ginning Factory [2013] 359 ITR 565 (Karnataka), it has been held that the show cause notice under section 274 was defective as it does not spell out the grounds on which the penalty is sought to be imposed and consequently, penalty imposed was cancelled. The case law in the case of Mahabir Prasad Agarwal v. ACIT Kolkata Tribunal in [I.T.A. No. 738 739/Kol/2013 dated 15-10-2016] also support the case of the assessee as the facts are identical with the facts of the present appeals as in these appeals the show cause notices issued before imposing penalty did not specified whether as to the assessee is guilty of having furnished inaccurate particulars of income or of having concealed particulars of such income. We may also draw support from the recent decision of coordinated bench Mumbai Tribunal in the case of Meharjee Cassinath Holdings Pvt. Ltd. v. ACIT Circle 4(2) in I.T.A. No. 2555/ Mum/2012 order dtd. 28.04.2017 has also held that the notice issued u/s. 274 by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... habbir Allaudin Latiwala v. DCIT [2011] 29 CCH 0713(Rajkot-Trib) , Dilip N Shroff v. JCIT [2007] 291 TTR 519 (SC), Rishi Kumar Agarwal v. DCIT [2017] 6 TMI 396(Kol-Trib) ,Anand Satish Kumar Bhutada v. ITO [2017] 5 TMI 482 (Pune-Trib), Siddhi Home Makers v. ITO 5 TMI 121 (ITAT-Mum) [2017] also supports the contention of the assessee. 17. The decision of Mak Data P. Ltd. vs. CIT [2013] 358 ITR 593(SC) relied by Revenue says that the AO has to satisfy whether penalty proceedings are to be initiated or not during the course of assessment proceedings, but in the instant case, the AO stated he is satisfied the it is fit case for initiation of the penalty proceedings under section 271(1)(c) and 271AA , meaning thereby that the AO was not sure under which section he is initiating penalty proceedings. Further, in show-cause notice the AO has not specified specific charges, hence, said decision is distinguishable on facts and law. In the case of Nemichand Jain (Supra) show-cause notice for penalty proceedings has specifically stated that the penalty proceedings under section 271(1)(c) are separately initiated. However, in the case in hand, there was no such mention. The decision of Mahesh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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