TMI Blog2019 (9) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 271(1)(c) i.e. for concealing particulars of income or furnishing inaccurate particulars of such income, penalty proceedings have been initiated rather written vague and ambiguous satisfaction recorded that, penalty proceedings u/s 271(1)(c) are initiated - Decided in favour of assessee. - ITA No.2550/Del./2016 - - - Dated:- 13-9-2019 - Shri Kuldip Singh, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri K.P. Garg, CA For the Revenue : Ms. Naina Soin Kapil, Senior DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, M/s. Vashulinga Finance Pvt. Ltd. (hereinafter referred to as the assessee ) by filing the present appeal sought to set aside the impugned order dated 08.02.2016 passed by the Commissioner of Income - tax (Appeals)-9, New Delhi qua the assessment year 2011-12 on the grounds inter alia that :- 1. The ld. CIT(A) has erred on facts and in law in confirming the penalty imposed by ld. AO u/s 271(1)(c) for a sum ₹ 7,36,512/-. 2. The ld. CIT(A) has erred on facts and in law in dismissing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een levied by the AO u/s 271(1)(c) of the Act on the ground that while computing taxable income, assessee had made excessive claim of ₹ 19,70,000/- in order to reduce tax liability, thus willfully claimed excessive bad debts written off. 6. In the backdrop of the aforesaid facts and circumstances of the case, order passed by the lower authorities and arguments addressed by the authorized representatives of both the parties, the sole question arises for determination in this case is:- as to whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income during assessment proceedings? 7. Ld. AR for the assessee contended that in order to initiate the penalty proceedings, the AO has failed to specify in the show-cause notice issued u/s 271(1)(c)/274 of the Act if the assessee has concealed the particulars of income or has furnished inaccurate particulars of income and relied upon the decisions of Hon ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory-359ITR 565, CIT vs. SSA s Emerala Meadows -73 taxmann.com 241 (Kar.) (Revenue s SLP dismissed in 242 taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required to be specifically made aware of the charges to be leveled against him/her. 10. Hon ble High Court of Karnataka in case of CIT vs. Manjunatha Cotton and Ginning Factory (supra) while deciding the identical issue held that when the AO has failed to issue a specific show-cause notice to the assessee as required u/s 274 read with section 271(l)(c), penalty levied is not sustainable. The operative part of the judgment is reproduced 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 1 (B), then though penalty proceedings are in the nature of civil liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile deciding the identical issue held as under :- 21. The Respondent had challenged the upholding of the penalty imposed under Section 271 (1) (c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA's Emerald Meadows (2016) 73 Taxman.com 241 (Kar) , the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of2016 by order dated 5th August, 2016. 13. Following the decisions rendered in the cases of CIT vs. Manjunatha Cotton and Ginning Factory, CIT vs. SSA s Emerala Meadows and Pr. CIT vs. Sahara India Life Insurance Company Ltd. (supra), we are of the considered view that when the notice issued by the AO is bad in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
