TMI Blog2019 (4) TMI 1299X X X X Extracts X X X X X X X X Extracts X X X X ..... This appeal by the assessee is directed against the order of CIT(A)-3, Bangalore, dated 13.06.2018, partly sustaining the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 (in short the Act ) for the Assessment Year 2014-15. 2. Briefly stated, the facts of the case are as under: 2.1 The assessee filed his return for Assessment Year 2014-15 on 28.11.2014 declaring total income of ₹ 39,87,160/-. The case was taken up for scrutiny for this Assessment Year and the assessment was concluded under section 143(3) of the Act vide order dated 27.12.2016, wherein the assessee s income was determined at ₹ 57,19,570/-; in view of disallowances amounting to ₹ 17,32,409/-. 2.2 Penalty proceedings under section 271(1)(c) of the Act was initiated simultaneously vide notice under section 274 r.w.s. 271(1)(c) of the Act of even date i.e., 27.12.2016 in respect of the aforesaid disallowances. After considering the assessee s replies in the matter, the AO proceeded to levy penalty of ₹ 5,35,314/- under section 271(1)(c) of the Act vide order dated 28.06.2017. On appeal, the CIT(A)-3, vide the impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ground No.2.1 to 2.3 4.1 At the outset , the learned Counsel for the assessee urged ground Nos.2.1 to 2.3 contending that the CIT(A) ought to have deleted the penalty levied u/s 271(1)(c) of the Act for Assessment Years 2014-15 following the binding decision of Hon ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton and Ginning Factory (2013) 259 ITR 565 (Kar); since the notice u/s 274 r.w.s. 271 of the Act for initiation of penalty u/s 271(1)(c) of the Act dated 27.12.2016 was defective and issued without any application of mind by the AO, since in the said notice the AO had initiated penalty for both concealment of income and furnishing of inaccurate particulars of income; without striking out the inappropriate portions. Therefore, the conditions precedent for a passing of valid penalty orders u/s 271(1)(c) of the Act were absent. In this regard, the learned AR drew the attention of the Bench to the copy of the impugned notice, issued u/s 274 r.w.s. 271(1)(c) of the Act dated 27.12.2016 for Assessment Year 2014-15 filed by the assessee, to demonstrate that the said notice was defective, in as much as it did not indicate whether it was issued to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curate particulars of income; is invalid and the consequential penalty proceedings/orders 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 rase of relying on deeming provision contained in Explanation-I or in Explanation- 1(B), then though penalty proceedings are in the nature of civil liability, in fact, it is' penal in nature. in either event, the person who is accused of the conditions mentioned in Section 271 should be made known about the grounds on which they intend imposing penalty oil as the Section 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und, 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 a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pal reported in 292 ITR 11 at page 19 has held that. concealment of in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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