TMI Blog2018 (11) TMI 1548X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-2018 - Shri N.V. Vasudevan, Judicial Member And Shri Jason P Boaz, Accountant Member For the Appellant : Shri V. Srinivasan, Advocate For the Respondent : Smt. Srinidhi Das, Addl. CIT (D.R) ORDER PER SHRI JASON P BOAZ, A.M. : This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-7, Bangalore dt.12.06.2018 upholding the orders of the ACIT, Circle 7(2)(1), Bangalore dt.30.05.2017 levying penalty of ₹ 26,37,567 under Section 271(1)(c) of the Income Tax Act, 1961 (in short 'the Act') for the Assessment Year 2014-15. 2.1 Aggrieved by the order of the CIT (Appeals) 7, Bangalore dt.12.6.2018 for Assessment Year 2014-15 upholding the levy of penalty of ₹ 26,37,567 under Section 271(1)(c) of the Act, the a. has preferred this appeal raising the following grounds :- 1. The orders of the authorities below in so far as levying penalty u/s 271 of the Act against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The learned CIT[A] is not justified in upholding the penalty of ₹ 26,37,567/- levied u/s. of the Act in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and can be decided on the basis of material already on record. Following the ratio of the decision of the Hon ble Apex Court in the case of NTPC Ltd; (Supra), we admit the additional ground (Supra) for adjudication. 3 Addl. Ground Nos. 1 2 3.1 In these grounds (Supra), the sum and substance of the assessee s contentions are that the penalty proceedings initiated by the AO for asst. year 2014-15 vide notice issued u/s 274 r.w.s 271 of the Act dated 24/11/2016 for levy of penalty u/s 271(1)(c) of the Act, is defective. (A copy of the said notice is placed on record). A perusal thereof reveals that the Assessing Officer has not struck off the relevant portion in the show cause notice and therefore the show cause notice does not specify the charge against the assessee as to whether the charge is of concealment of particulars of income or furnishing of inaccurate particulars of income. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 discerned from the said order and if it is a case of relying on deeming provision contained in Explanation-I or in Explanation- l(B), then though penalty proceedings are in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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