TMI Blog2019 (1) TMI 1976X X X X Extracts X X X X X X X X Extracts X X X X ..... otice issued under section 274 r.w.s. 271 for initiating penalty proceedings under section 271(1)(c) of the Act in the case in hand is invalid and consequently, the penalty proceedings are also invalid - Decided in favour of assessee. - I.T.A. No. 1949 & 1950/Mum/2016 - - - Dated:- 31-1-2019 - Sh. R.C. Sharma, AM And Shri Sandeep Gosain, JM For the Appellant : Shri Abi Rama Karikiyen, DR. For the Respondent : Shri Nishant Thakkar Ms. Jasmin Amalsadvala, AR. ORDER Per Sandeep Gosain, Judicial Member: The present two Appeals have been filed by the revenue against the order of Commissioner of Income Tax (Appeals)-2, Mumbai, dated 31.12.15 for AY 2010-11 2011-12 respectively. 2. Since the issues raised in both the appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed of by this consolidated order. 3. At the very outset, Ld. DR appearing on behalf of the assessee drawn our attention towards letter dated 26.02.18 which relates to condonation of delay in filing appeal before Hon ble ITAT. Ld. DR submitted that the present appeal could not be filed within time because of huge worklo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amalgamated with its company, the amount was not disclosed in its books of accounts. In the assessment the AO noted that the interest amount was credited to the appellant's account and TDS certificate was issued in the appellant name. It was also noted by the AO that M/s. Casby CFS Pvt. Ltd., has not filed the return of income and the assessee has filed the revised return beyond the due date. With this reasoning the AO added the aforesaid sum of Rs.3,44,40,001/- to the total income of the appellant and accordingly, initiated penalty u/s.271(l)(c) of the Act. 8. Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties partly allowed the appeal of the assessee. 9. Aggrieved by the order of Ld. CIT(A), revenue has filed respective appeals before us. However at present we are dealing with the appeal filed by the revenue bearing ITA No. 1949/Mum/2016 on the grounds mentioned herein above. 10. In this case, it was noticed that the assessee has also raised a legal ground by moving an application under rule 27 of the I.T. (Appellate Tribunal) Rules 1963 on 20th March 2018 on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided to deal with the legal ground raised by the assessee/respondent. 15. We have heard the counsels for both the parties at length and we have also perused the material placed on record , judgment cited by the parties as well as orders passed by the revenue authorities. While addressing the arguments on merits, Ld. AR on behalf of the assessee/ respondent had also challenged the legality of the notice issued under section 274 r.w.s. 271 of the Act for initiating of the penalty proceedings under section 271(1)(c) of the Act. A perusal of the notice issued under section 274 r.w.s. 271 of the Act which is at page no. 17 of the paper book 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 regard, we find that the Hon'ble High Court of Karnataka in its order in the case of M/s Manjunatah Cotton Ginning Factory in ITA No. 2546 of 2005 dated 13.12.2012, relied on by the assessee /respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 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 initiate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round 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 under section 274 r.w.s. 271 of the Act dated 16.03.13 /26.03.13 for initiating penalty proceedings under section 271(1)(c) of the Act in the case in hand is invalid and consequently, the penalty proceedings are also invalid. Since the very basis for the levy ..... X X X X Extracts X X X X X X X X Extracts X X X X
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