TMI Blog2023 (4) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1)(c) is the sine qua non for initiation of proceedings and the penalty proceedings should be confined only to those grounds specifically stated in the notice. As recorded hereinabove, AO had issued notice only with regard to furnishing in accurate particulars. Whereas the satisfaction recorded is with regard to concealment of income particulars and the very ground has been struck-off. The notice has been issued on the specific premise that assessee had furnished inaccurate particulars of income. We are of the view that the penalty order is not sustainable in law. Decided in favour of assessee. - HON'BLE MR. JUSTICE P.S. DINESH KUMAR AND HON'BLE MR. JUSTICE C.M. POONACHA For the Appellant (By Shri. K.K. Chythanya, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of shares in the relevant assessment year. The Assessing Officer has recorded in para 3.1 of his order that the assessee had issued 75000 equity shares with the face value of Rs.10/- at a premium of Rs.690/- and had called upon the assessee to submit the valuation report in accordance with Rule 11U/11UA read with Clause (viib) Sub-section (2) of Section 56 of the Income Tax Act, 1961 [ IT Act ] . The Assessing Officer came to the conclusion that where a Company, not being a Company in which public are substantially interested, receives in any previous year, from any person being a resident, any amount for issue of shares that exceeds the face value of such shares, the aggregate consideration for such shares which exceeds the fair mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income-tax, Special Range, Mumbai [2007] 161 Taxman 218 (SC) (paras 43 to 67) . He made particular reference to para 60 and argued that the satisfaction of the Assessing Officer during the course of assessment proceedings with regard to concealment of income would constitute the basis of foundation for proceedings to levy penalty. He next relied upon Commissioner of Income-tax Vs. Manjunatha Cotton Ginning Factory [2013] 35 taxmann.com 250 (Karnataka)]. Adverting to para 60 of the said authority, he argued that the existence of grounds mentioned in Section 271(1)(c) of the Act is the sine qua non for initiation of proceedings and the penalty proceedings would be confined to only those grounds. 5. In reply, Sanmathi, le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usal of the same shows that the Assessing Officer was of the view that assessee has concealed true and correct particulars of its income whereas the ground on which the notice is issued is have furnished inaccurate particulars of income . It is relevant to note that five words have concealed particulars of income have been struck off in the notice. 10. We may record that in paras 60 and 67 of Dilip Shroff, it has held as follows: 60. It is furthermore interesting to note that this Court in D.M. Manasvi (supra) categorically opined that it would be the satisfaction of the Income Tax Officer in the course of the assessment proceedings regarding the concealment of income which would constitute the basis of foundation of the proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded hereinabove, the Assessing Officer had issued notice only with regard to furnishing in accurate particulars. Whereas the satisfaction recorded is with regard to concealment of income particulars and the very ground has been struck-off. The notice has been issued on the specific premise that assessee had furnished inaccurate particulars of income. 13. In view of the law laid down in the authorities referred by us, we are of the view that the penalty order is not sustainable in law. Hence, the following: ORDER (a) Appeal is allowed. (b) Order dated February 19, 2020 in ITA No.896/Bang/2019 for the A.Y. 2014-15 passed by the ITAT is set-aside. (c) Question No.1 is answered in favour of the assessee and against the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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