TMI Blog2019 (8) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... financial year 2007-08 - HELD THAT:- We find that the assessee has not offered interest income for tax due to wrong interpretations of the provisions of the Act and not on account of deliberate concealment of income or furnishing inaccurate particulars of such income. The assessee was under bonafide impression that she is a person resident outside India as defined under FEMA. The explanation furnished by the assessee in not disclosing the interest income in the return appears to be quite genuine. We also do not agree with the findings of the authorities below that the explanation furnished by the assessee is not covered by Clause(B) of Explanation-1 to Section 271(1)(c). After examining chronology of events and documents on record, we are satisfied that the explanation furnished by assessee is bonafide and acceptable. - I.T.A. No. 4909/Mum/2015 - - - Dated:- 27-8-2019 - Sh. Sandeep Gosain, JM And G. Manjunatha, AJM For the Appellant : Shri Nitesh Joshi T Shri Sunil S. Jhunjhunwala, ARs For the Respondent : Shri Vijay Kumar Soni, DR ORDER PER SANDEEP GOSAIN, JUDICIAL MEMBER: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal ground, thus the assessee can take the same at any stage of hearing. It was further submitted that the additional ground is purely question of law and no new facts are required to be brought on record. Therefore, applicant be allowed to raise additional grounds. 4. On the other hand Ld. DR submitted that the application dated 26.07.19 is misconceived and is liable to be dismissed. 5. After having heard the counsels on this application, we are of the view that since the additional ground raised by the assessee is purely legal in nature and it is a settled that legal pleas can be taken at any stage of hearing and all the necessary facts required for adjudication are already on the record and thus, no new evidence is required to be brought on record. Even otherwise, this ground goes to the roots of the case, therefore keeping in view the principle laid down by Hon ble Supreme Court in the case of NTPC Vrs CIT 229 ITR 383, Jute Corporation of India Vrs. CIT 187 ITR 688 (SC) and Ahmedabad Electricity Ltd. Vrs. CIT 199 ITR 351 (Bom) (FB), we allow the application dated 26.07.19 and admit the additional grounds mentioned above for adjudicating on me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aisetty Revathi before the Hon'ble Andhra Pradesh High Court, the department had relied on judgment of Hon'ble Supreme Court in case of K P Madhusudhan, 251 ITR 99 and the same was distinguished and penalty was deleted following ratio laid down in case of Manjunatha (supra). The relevant of the said judgment is reproduced below:- Smt. Kiranmayee, learned counsel, placed reliance on the judgment of the Supreme Court in K.P. MADHUSUDHAN'AN V/s. COMMISSIONER OF INCOME TAX, COCHIN . Therein, ?the Supreme Court held that it is not necessary for the Assessing Officer, while issuing a notice under Section 271(1 )(c)f to expressly invoke Explanation 1(B) appended to the provision. It is however relevant to note that Explanation 1(3) merely adverts to a case of failure of an assessee to substantiate the explanation offered whereby the amount added or disallowed while computing the total income of such person for the purposes of the penalty provision shall be deemed to represent the income in respect of which particulars had been concealed. The Supreme Court observed that the statutory provision included the Explanation and once the assessee was put on notice, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to mean that there is no need for mentioning the specific limb of section 271(l)(c) of the Act for which the penalty was intended to be imposed, as such issue never came up for consideration before the \Hon'ble High Court. That being the case, the aforesaid decision cannot be applied for rebutting the proposition that in the absence of recording of satisfaction regarding the exact nature of offence, no penalty under section 271(l)(c) can be imposed. In view of the aforesaid, we delete the penalty imposed. 14. On the other hand learned DR relied on the order of lower authorities and contended that the penalty in this case was correctly levied considering the facts of the case. 15. We have heard arguments on this issue and a perusal of the notice issued under section 274 r.w.s. 271 of the Act dated 28.12.10 reveals that the AO has not deleted the inappropriate words and parts of the notice, whereby it is not clear as to the default committed by the assessee, i.e. whether it is concealment of particulars of income or furnishing of inaccurate particulars of income that the penalty under section 271(1)(c) of the Act is sought to be levied. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces, 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 offences but in such cases the initiation of the penalty proceedings also must be for both the offences. But drawing up penalty proceedings for one offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law. It is needless to point out satisfaction of the existence of the grounds mentioned in Section 271(1)(c) when it is a sine qua non for initiation or proceedings, the penalty proceedings should be confined only to those grounds and the said grounds 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct should specifically state the ground mentioned in Section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. q) Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law. r) The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. s) Taking up of penalty proceedings on the limb and finding the assessee guilty of another limb is bad in law. 17. It may be mentioned that in this regard, no contrary decision of the Hon'ble Apex Court or the Hon'ble Bombay High Court has been brought to our notice or placed before us for consideration. Therefore, respectfully following the decision of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton Ginning Factory reported in (2013) 359 ITR 565 (Kar), decision of Hon ble Bombay High Court in the case of CIT Vrs Samson Perinchery dated 05.01.2017, we hold that the notice issued unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 2(w) of FEMA, 1999. The person resident outside India and persons resident in India as defined under FEMA, 1999 are re-produced as under: (v) person resident in India means- (i) a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include- (A) a person who has gone out of India or who stays outside India, in either case- (a) for or on taking up employment outside India, or (b) for carrying on outside India a business or vocation outside India, or (c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period; (B) a person who has come to or stays in India, in either case, otherwise than- (a) for or on taking up employment in India, or (b) for carrying on in India a business or vocation in India, or (c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; (ii) any person or body corporate registered or incorporated in India, (iii) an office, branch or agency in India owned or controlled by a person resident outside India, (iv) an office, branch ..... 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