TMI Blog2020 (2) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... notice issued by the Assessing Officer was not in substance, and effect in conformity with or according to the intent and purpose of the Act, since the Assessing Officer did not specify the charge for which penalty proceedings were initiated and further there was non-application of mind on the part of the Assessing Officer. For the reasons given above, we hold that levy of penalty in the present case cannot be sustained. - ITA No.1950/Bang/2017 - - - Dated:- 18-2-2020 - Shri Chandra Poojari, AM And Smt.Beena Pillai, JM For the Appellant : Sri.R.Chandrasekhar , Advocate For the Respondent : Smt.Swapna Das, JCIT-DR ORDER PER CHANDRA POOJARI, AM : This appeal filed by the assessee is directed against the penalty order of the CIT(A) passed u/s 271(1)(c) of the Act, dated 05.06.2017. The relevant assessment year is 2012- 2013. 2. The assessee has raised the following grounds:- 1. The order passed by the Assessing Officer is illegal, baseless and opposed to the facts of the case. The learned Income Tax Officer has not clearly specified as to for which reason he has initiated penalty proceedings u/s 271(1)(c) of the Income tax Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-. Penalty proceedings u/s 271(1)(c) of the Act for concealing the particulars of income were initiated. As there was change of incumbent, an opportunity of being heard was afforded to the assessee by issue of notice u/s.129 dated 10/9/2015 positing the case on 14/912015. There was no response of the assessee to the said notice. As there was further change of incumbent, notice u/s.129 dated 24.9.2015 was issued to the assessee posting the case on 29.9.2015. For this notice also there was no response from the assessee. Not responding to the notices issued shows that the assessee has nothing to say in the matter. In this case survey u/s.133A has taken place on 19/2/2013. The income was offered for taxation during the course of survey. The assessee was to immediately pay the taxes and revise the return of income, which the assessee has failed. As the assessee failed to revise the return of income, Notice u/s.148 was issued to the assessee calling for the return of income. The Notice u/s.148. was issued on 29/812013. The assessee has filed the revised return of income on 29/3/2014. Further, the assessee has failed to file the revised return of income by making payment despite declarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17.10.2016], wherein the Tribunal held as under:- 9. We heard rival submissions and perused material on record. The only issue involved is whether levy of penalty u/s 271(1)(c) is valid in law keeping in view the decision of the jurisdictional High Court in the case of Manjunatha Cotton Ginning Factory (supra). The contention of the assessee is that since the AO has not ticked off the relevant column in the show cause notice, it goes to prove that the AO had not reached satisfaction before initiating proceedings u/s 271(1)(c). The contention of the learned counsel for assessee that the relevant column has not been ticked, cannot be accepted as it is found from material placed before us that for both the years, the column relevant to concealment of particulars of income has been ticked by the AO. In any event, it is found that the assessee has offered an explanation for concealment of particulars of income only. The AO, considering the explanation, had levied penalty. The assessee, at no stage of penalty proceedings, has raised this issue. The assessee had participated in the penalty proceedings and at no stage had complained of violation of the principles of natural justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one 'occurred in the present case, namely, the period of filing return of income was not specified as contemplated by Section 148 of the Act. If such a defect is not allowed to be cured, or treated as invalid so as to declare the notice invalid, despite the fact that assessee had taken that notice as valid and responded to it in letter and spirit and participated in the proceedings, the very purpose / objective of the provisions contained in Section 292B of the Act would stand frustrated / defeated. The intent of the Legislature is clear from the language employed in this provision which states that a defective notice, such as the one in the present case, cannot be declared invalid by reason of any' mistake, defect or omission, if the notice in 'substance' and in. 'effect' is in conformity with or according to the intent of purpose of this Act. The intent or purpose of issuing the notice is to call upon the assessee to file return, if the Assessing Officer finds that income has escaped the assessment. This being the intent and purpose of the provisions contained in Section 148 of the Act, in our opinion, it stands satisfied if the notice is responded within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO while passing the assessment order has to satisfy that inaccurate particulars of income has been furnished by the assessee in the return of income. From a perusal of the order, it is clear that the assessee has sought the exemption of income u/s.80IA of the Act, on the pretext that the assessee is an eligible undertaking within the meaning of Section 80IA. However, it is only during the course' of a survey when a statement of the Director of the company was recorded, it came to light that the assessee was not entitled for the benefit of Section 80IA of the Act. Even otherwise, the assessee has not furnished the details of any infrastructure project constructed or maintained by it during the year under consideration. Thus it is clear that the assessee has deliberately furnished the inaccurate particulars of income and thereby sought to avail the beneficial provisions of Section 80IA. The assessee was aware that it was not entitled and therefore this fact was accepted by the assessee during the course of survey. In view thereof, when the assessee has furnished inaccurate particulars of income in the return of income arid claimed the benefit u/s.80IA and has filed nil return o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the Act the AO has not struck out the irrelevant part. It is not spelt out as to whether the penalty proceedings are sought to be levied for furnishing inaccurate particulars of income or concealing particulars of such income . 5.1 The Hon'ble Karnataka High Court in the case of CIT Anr. v. Manjunatha Cotton and Ginning Factory, 359 ITR 565 (Karn), has held that notice u/s. 274 of the Act should specifically state as to whether penalty is being proposed to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of income. The Hon'ble High court has further laid down that certain printed form where all the grounds given in section 271 are given would not satisfy the requirement of law. The Court has also held that initiating penalty proceedings on one limb and finding the assessee guilty in another limb is bad in law. It was submitted that in the present case, the aforesaid decision will squarely apply and the orders imposing penalty have to be held as bad in law and liable to be quashed. 12. The Hon'ble Karnataka High Court in the case of CIT Anr. v. Manjunatha Cotton and Ginning Factory (supra) has laid down the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 impose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the conditions mentioned in Section 271(1)(c), at least the facts set out in Explanation 1(A) (B) it should be discernible from the said order which would by a legal fiction constitute concealment because of deeming provision. g) Even if these conditions do not exist in the assessment order passed, at least, a direction to initiate proceedings under Section 271(l)(c) is a sine qua non for the Assessment Officer to initiate the proceedings because of the deeming provision contained in Section 1(B). h) The said deeming provisions are not applicable to the orders passed by the Commissioner of Appeals and the Commissioner. i) The imposition of penalty is not automatic. j) Imposition of penalty even if the tax liability is admitted is not automatic. k) Even if the assessee has not challenged the order of assessment levying tax and interest and has paid tax and interest that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment order that, it is on account of such unearthing or enquiry concluded by authorities it has resulted in payment of such tax or suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as invalid in the penalty proceedings. 5.2 It is clear from the aforesaid decision that on the facts of the present case that the show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Further, the Hon ble Karnataka High Court in the case of CIT v. SSA s Emerald Meadows in ITA No.380 of 2015 dated 23.11.2015, it was held that imposing penalty u/s 271(1)(c) of the Act is bad in law and invalid for the reason that the show cause notice issued u/s 274 of the I.T.Act does not specify the charge against the assessee as to, whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. As against this decision of the Hon ble Karnataka High Court, the Revenue has preferred an appeal in SLP in CC No.11485 of 2016 and the Hon ble Supreme Court by order dated 05.08.2016 dismissed the SLP preferred by the Department. These judgments were followed by the co-ordinate Bench in the case DCIT v. Shri C.S.Prasad in ITA No.359/Bang/2018 order dated 15.02.2019. Following the decision of the Hon'ble Karnataka High Court, we hold that the orders imposing penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
