TMI Blog2019 (4) TMI 1660X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions mentioned in Section 271 should be made known about the grounds on which the Department is imposing penalty, as Section 274 makes it clear that the assessee has right to contest such proceedings and should have full opportunity to meet the case of the Department and show that conditions stipulates in Section 271(1)(c) did not exist and is not liable to pay the penalty. Mere sending of printed form with all the grounds mentioned is not sufficient compliance of law. The aforesaid principle and ratio laid down by the Hon'ble Karnataka High Court would also apply in the present case, because here in this case the AO while issuing a show cause notice u/s.274 r.w.s. 271 in printed format has not specified the grounds as to under which limb he is proposing to initiate and levy a penalty u/s. 271(1)(c). Thus, we hold that impugned penalty levied by the Assessing Officer is not valid and same is not sustainable. On this ground the entire penalty is deleted. - Decided in favour of assessee. - I.T.A. No.4585/DEL/2015, I.T.A. No.3238/DEL/2015 - - - Dated:- 25-4-2019 - Shri G.D. Agrawal, Vice President And Shri Amit Shukla, Judicial Member For the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered. In response, the assessee filed the relevant agreements and stated that the expenditure resulted in improvement of technology of battery production and the results were evident from the audited account. It was further submitted that assessee had no expertise in the field and the said zinc manufacturing facility had been acquired from M/s. Shervani Industrial Syndicate Ltd. However, the Assessing Officer held that no evidence of any services was given by the assessee and the payments made are more than ₹ 1 crore per month and no evidence of any travel by M/s. Shervani Industrial Syndicate Ltd. personnel to the factory, advice given, evaluation done, technology provided, etc. was submitted. Accordingly, he made the disallowance. 3. As regards disallowance of payment of excise duty of ₹ 70 lacs is concerned, the assessee has claimed deduction of the said amount u/s.43B and stated that this amount was paid as excise duty under protest on the demand of Excise Authorities from M/s. Rialto Enterprises Pvt. Ltd., which company used to manufacture the goods for the assessee company who markets them. This amount was not claimed as expenditure in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atha Cotton Ginning Factory, reported in (2013) 359 ITR 565 (Kar.) and also referred to the judgment of Hon'ble Supreme Court in the case of VeerbhadrappaSangappa Co. (TS- 381-SC-216), wherein Revenue s SLP has been dismissed against the Karanataka High Court judgment. He also referred to judgment of Hon'ble Gujarat High Court in the case of Manu Engineering reported in 122 ITR 306 (Guj.) and Hon'ble Delhi High Court in the case of Virgo Marketing reported in 171 Taxman 156 (Del) . He also relied upon various Tribunal decisions of the Co-ordinate Benches on similar issue following the aforesaid judgments. 7. On the other hand, learned Department Representative, submitted that here in this case, Assessing Officer in the assessment order itself has specifically mentioned that penalty u/s.271(1)(c) r.w.s. Explanation-I is initiated for furnishing of inaccurate particulars of income in respect of additions/disallowances made. Even in the penalty order also, the penalty has been levied on account of furnishing of inaccurate particulars of income. Thus, charge was specific right from the stage of assessment proceedings to the passing of the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e person has to meet specifically. Otherwise, principle of nature justice is offended if a show cause notice is vague. On the basis of such proceedings, no penalty can be imposed on the assessee. The relevant observation and law specified by their Lordships in this regard reads as under: 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-1 or in Explanation-l(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 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok P ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
