9911796707
TMI Blog2018 (12) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... ng assessment proceedings the AO noted that during the year under consideration the assessee had purchased two plots measuring 270 sq.yd. each situated at Moja Barewal Awaria, Ashapuri, Ludhiana. The source of investment in these properties Rs. 41 lacs was stated by the assessee as being out of the surrendered income of Rs. 41 lacs. The Assessing Officer noted that the surrender was made after detection of concealment by the Department by way of search u/s 132 of the Act and therefore initiated penalty proceedings on the same u/s 271(1)(c) of the Act. During penalty proceedings the assessee contended that the surrender had been suo moto disclosed by the assessee in his return of income and had not been added by the Assessing Officer and further that no infirmity had been found in the explanation of the assessee or the documents submitted in support of his contention. It was therefore contended that no penalty u/s 271(1)(c) was leviable in the present case. The Assessing Officer rejected the contention of the assessee and levied penalty u/s 271(1)(c) of the Act, stating that the surrender was covered only in the year of search or the preceding year of which return was due but not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before us. On perusing the records of the proceedings before us, it was noticed that the Ld. counsel for assessee on several occasions had sought adjournment stating that the facts and circumstances of the present case are identical to that in the case of Munish Jain Vs. DCIT in ITA Nos.254 & 255/Chd/2017. The Ld. counsel for assessee vide its letters dated 19.9.2017, 22.11.2017 and 19.2.2018 had stated so. In all the above letters the Ld. counsel for assessee pleaded that the aforesaid case had been heard and since the facts were identical to that in the present case the hearing in the present case was sought to be adjourned till the order in the case of Munish Jain Vs. DCIT in ITA Nos.254 & 255/Chd/2017 was pronounced. Since admittedly, the facts of the present case were identical to that in the case of Munish Jain Vs. DCIT in ITA Nos.254 & 255/Chd/2017, and the order in the said case had been pronounced by the Tribunal, the reason for which adjournment was sought by the assessee on earlier occasions no longer remained relevant and further no reason was given for seeking adjournment on the present date of hearing. The matter was therefore proceeded to be heard with since it a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds are crucial in passing a judicial matter and in the interest of Justice. Thanking you, Yours sincerely, (CA Rajeev K. Gupta) (Counsel) It was also stated in the said application that being a legal ground the same be admitted for adjudication in view of the decision of the Hon'ble Apex Court in the case of NTPC Limited Vs. CIT, 299 ITR 383. 7. The Ld. DR did not object to the same. 8. Since the ground raised by the assessee is a legal ground challenging the validity of the order passed u/s 271(1)(c) of the Act, we hereby admit the same in view of the decision of the Hon'ble Supreme Court in the case of NTPC Limited (supra). 9. Further it was pointed out, as stated earlier, that the facts of the present case and the issue involved were identical to that in the case of Munish Jain (supra) and the decision rendered therein by the ITAT, dismissing all the grounds raised by the assessee ,thereby upholding the levy of penalty ,therefore squarely applied in the present case. 10. We have heard the Ld.DR and also gone through the orders of the authorities below and the order of the ITAT in the case of Munish Jain (supra).On going through the order of the I.T.A.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee originates from the order of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory (supra) which was followed by the Hon'ble Karnataka High Court again in SSA's Emerald Meadows (supra) wherein SLP filed before the Hon'ble Supreme Court was dismissed and the said judgment was also relied upon by the Tribunal in a number of decisions rendered and cited by the Ld. counsel for assessee before us. It is, therefore, pertinent to understand the reasoning laid down by the Hon'ble Karnataka High Court in Manjunatha Cotton & Ginning Factory (supra) while holding that the notice u/s 274 must specifically spell out the charge fixed on the assessee for the purpose of levy of penalty whether concealment or furnishing of inaccurate particulars of income by striking out the irrelevant clause in the notice. Para 59 of the order deals with the same and is being reproduced hereunder for reference: "NOTICE UNDER SECTION 274 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 ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds have to be specifically stated so that the assessee would have the opportunity to meet those grounds. After, he places his version and tries to substantiate his claim, if at all, penalty is to be imposed, it should be imposed only on the grounds on which he is called upon to answer. 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, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the authority of the existence of any of the grounds would be sufficient compliance of the aforesaid condition. The Hon'ble High Court further held that in situation where the order of the authority is not clear vis-a-vis ground for which it is initiated, as in cases where there is deemed concealment as per Explanation-1 to section 271(1)(c) of the Act and deemed satisfaction of the authority of concealment as per section 271(1)(b) of the Act, then, the Hon'ble High Court has held, that the notice should clearly reflect the exact ground for which penalty is levied. The Hon'ble High Court has in very clear words explained that the proceedings being penal in nature the assessee should be made aware of the grounds on which penalty is being levied so that he can adequately defend himself. The crux of the judgment therefore is that the notice u/s 274 should clearly bring out the charge against the person who is being penalized either by referring to the assessment order where the AO has clearly recorded his satisfaction of the existence of ground warranting levy of penalty or where the same is absent ,by way of striking off the irrelevant ground which finds mention in the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circle-Ill, Ludhiana. The charge against the assessee is therefore on both Courts which as pointed out above by us has been held to be plausible as the same can be overlapping in certain circumstances. 15. There is, therefore, no infirmity in the notice and the ground for which penalty was initiated on the assessee has been clearly and unambiguously brought out in the said notice. The assessee has also, we find, responded to the notice and was given full opportunity to defend himself against the said charges which was duly availed of also by the assessee. Necessary and requisite reply defending himself from the charges was filed before the Assessing Officer. It is not the case of the assessee that due opportunity was not given to the assessee. Under the aforesaid circumstances we find that there is no violation of the principles of natural justice in the present case when the assessee having been aware of the specific charge for which penalty was initiated and also having been given due opportunity to defend himself from the said charge. We, therefore, cannot agree with the contention of the Ld. counsel for assessee that the notice issued to it u/s 274 of the Act suffered from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is found to be the owner of- (i) any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilizing (wholly or in part) his income for any previous year; or (ii) any income based on any entry in any books of account of other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and,- (a) Where the return of income for such previous year has been furnished before the said date but such income has not been declared therein: or (b) the due date for filing the return of income for such previous year has expired but the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the facts, as obtaining, in the case law, relied upon by the assessee, as discussed above. 30. Further, the provisions of Section 153A are specifically are brought on the Statute book, for assessment, in case of search u/s 132(1) of requisition of books of account u/s 132A of the Act. The opening sentence of Section 153A of the Act, overrides the provisions of Section 139, 147, 148, 149, 151 and 153 of the Act. The assessee has declared undisclosed income, in the return filed- in response to notice u/s 153A of the Act and the CIT(Appeals), having regard to the facts of the case, invoked the currently applicable Explanation 5A Section 271(1) (c) of the Act and upheld the penalty, levied by the AO. In such a fact-situation, the CIT(Appeals) has acted in accordance with the currently operative and relevant penal provisions, with reference to the return of income, filed in response to Section 153A of the Act. 31. In view of the above legal and factual discussions, and having regard to the express statutory provisions of Section 271(1) (c) of the Act read with Explanation 5A there under, as inserted by the Finance. (No. 2) Act, 2009, with retrospective effect from 01.06.2007, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous year has been furnished before the said date but such income has not been declared therein; (b) the date for filing the return of income for such previous year has expired but the assessee has not filed the return. Then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income.]" 21. There is no dispute vis-à-vis the finding of the CIT(A) that since search in the present case was initiated after 1st day of June 2007 Explanation 5A to section 271(1)(c) was applicable. Ld.Counsel for the assessee has made no arguments challenging this finding of the CIT(A). 22. Further we find no infirmity in the interpretation of the Ld.CIT(A) of Explanation 5A to section 271(1)(c) since the language of Explanation 5A is very clear and unambiguous, that the assessee will be deemed to have concealed particulars of his income vis a vis income declared in the return filed in response to notice u/s 153A after sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee being found during search to be the owner of assets acquired out of earlier undisclosed income is therefore met. The contention of the assessee that no incriminating material was found during search, we hold, has been rightly dismissed by the CIT(A). 24. In view of the above we uphold the order of the CIT(A) Act, confirming the levy of penalty of Rs. 7,66,320/- u/s 271(1)(c) of the Act." 11. In the present case, vis a vis the additional ground raised by the assessee that the order passed u/s 271(1)(c) was invalid and bad in law as also the penalty proceedings initiated vide notice u/s 274 r.w.s 271(1)(c) of the Act,since no submissions were made in this regard ,oral or written,by the assessee nor any copy of the notice issued u/s 274 filed before us pointing out any infirmity in the same,the said additional grounds are dismissed. 12. As for the ground raised challenging the levy of penalty on merits ,since admittedly the facts in the present case are identical to that in the case of Munish Jain (supra) the decision rendered by the ITAT in the said case squarely applies to the present case following which we uphold the levy of penalty u/s 271(1)(c) of the Act of Rs. 11,68, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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