TMI Blog2020 (4) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... 019, whereby he confirmed the penalty of ₹ 8,65,200/- imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961. 2. The assessee in the present case is an individual, who filed his return of income for the year under consideration on 15.03.2013 declaring total income of ₹ 32,35,337/-. In the assessment completed under section 143(3) vide an order dated 31.03.2015, the total income of the assessee was determined by the Assessing Officer at ₹ 63,91,337/- after making, inter alia, an addition of ₹ 28,00,000/- on account of cash deposits found to be made in the Bank account of the assessee by treating the same as unexplained. On confirmation of the said addition by the ld. CIT(Appeals) vide an appellate order dated 06.06.2016, a show-cause notice was issued by the Assessing Officer requiring the assessee to explain as to why penalty under section 271(1)(c) should not be imposed in respect of the addition of ₹ 28,00,000/- made to his total income. Since the assessee failed to offer any explanation in response to the said notice, the Assessing Officer proceeded to impose penalty of ₹ 8,65,200/- under section 271(1)(c) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO has not struck out the irrelevant part. It is therefore 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 . 8.1 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 find 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 all the orders imposing penalty have to be held as bad in law and liable to be quashed. 8.2 The Hon ble Karnataka High Court in the case of CIT Anr. v. Manjunatha Cotton and Ginning Factory (supra) has laid down the following p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 imposed, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evisional Authority. f) Even if there is no specific finding regarding the existence 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 unea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings. (emphasis supplied) 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. Following the decision of the Hon ble Karnataka High Court, we hold that the orders imposing penalty in all the assessment years have to be held as invalid and consequently penalty imposed is cancelled. For the reasons given above, we hold that levy of penalty in the present case cannot be sustained. We therefore cancel the orders imposing penalty on the Assessee and allow the appeal by the Assessee . 5. In our opinion, the decision of the Coordinate Bench of this Tribunal rendered in the case of Suvaprasanna Bhattacharya vs.- ACIT rendered vide its order dated 06.11.2015 in ITA No. 1303/KOL/2010 by relying on the decision of the Hon ble Karnataka High Court in the case of CIT Another vs.- Manjunatha Cotton Ginning Factory reported in 359 ITR 565 is squarely applicable in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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