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TMI Blog2018 (8) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to the facts relating to the year 2009-10. 3. Brief facts of the case are that originally the assessee filed the return of income on 30.9.2009 declaring a loss of Rs. 1,13,74,180/-. Pursuant to the search and seizure operations u/s 132 of the Income-tax Act, 1961 ("the Act") on 10.2.2012 and issuance of notice u/s 153A of the Act, assessee filed the return of income declaring a loss of Rs. 27,62,303/- which the assessee revised declaring nil income. Assessment was completed on the nil income only. However, the learned Assessing Officer (Ld. AO) opined that the conduct of the assessee in initially declaring a huge loss, which was reduced substantially pursuant to the notice u/s 153A and subsequent revision declaring nil income amounts t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT Del); and Prem Arora vs DCIT (2017) 78 DTR 91. Lastly, it is contended by the learned AR that during the search no incriminating documents, assets or income was found which resulted in the addition, as such, under Explanation 5A of Section 271(1)(c) of the Act, no penalty is leviable. 6. Learned DR heavily relied upon the orders of the authorities below and submitted that the case law relied upon by the assessee has no application to the facts of the case. 7. We have gone through the record in the light of the submissions made on either side. As a matter of fact, there is no dispute that pursuant to the notice issued u/s 153A, the assessee filed the return of income on 14.7.2014 which was revised on 24.2.2015 declaring nil income and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being heard in person or through authorized representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271." 10. There is no mention of the limb, which is attracted in this matter so as to enable the assessee to defend themselves. On this aspect, in the case of CIT vs Manjunatha Cotton & Ginning Factory, 359 ITR 565 (Kar) vide paragraph 60, the Hon'ble Karnataka High Court has held as follows :- "60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 11. Hon'ble Karnataka High Court in the case of CIT vs SSA's Emerald Meadows supra in ITA No. 380 of 2015 dated 23.11.2015, which was approved by the Hon'ble Supreme Court by dismissal of Special Leave Petition (SLP) filed by the Revenue in CC No. 11485/2016 dated 5.8.2016, considered the question of law as to,- "Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, clear that for the AO to assume jurisdiction u/s 271(1)(c), proper notice is necessary and because of the defect in notice u/s 274 of the Act, we find it difficult to hold that the learned AO rightly assumed jurisdiction to passed the order levying the penalty. 15. Be that as it may, as the facts indicate the entire dispute relates to the question whether the business is set up or not. Whether the assessee did any business or not is not relevant if the business is set up during the year under consideration. This is a debatable issue and was not finally decided by the AO because the assessee withdrew their claim by revising the return of income. As is held in the case of Neeraj Jindal (supra) and other cases relied upon by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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