TMI Blog2023 (11) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... initiated the penalty only for furnishing inaccurate particulars of income. This action of the ld. AO cannot be upheld. Penalty should be clear as to the limb for which it is levied and the position being unclear here, the penalty is not sustainable. See Manjunatha Cotton Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] . Decided in favour of assessee. - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER For the Appellant : Shri Ankur Pai, A.R. For the Respondent : Shri V. Parithivel, D.R. ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER: These two appeals by the assessee are directed against different orders of CIT(A) for the assessment years 2015-16 2016- 17 dated 22.2.2023 16.2.2023 respectively, wherein ld. CIT(A) has confirmed the levy of penalty u/s 271(1)(c) of the Income-tax Act,1961 ['the Act' for short]. The grounds in both the assessment years are common in nature except for the figures. Hence, these are clubbed together, heard together and disposed of by this common order for the sake of convenience. The grounds raised in AY 2015-16 are reproduced as under: 1. The order of the ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available on record. In our opinion, all the facts are already on record and there is no necessity of investigation of any fresh facts for the purpose of adjudication of above ground. Accordingly, by placing reliance on the judgement of Hon ble Supreme Court in the case of NTPC Vs. CIT 229 ITR 383 (SC) we inclined to admit the additional ground for the purpose of adjudication as there was no investigation of any fresh facts otherwise on record and the action of the assessee is bonafide. 5. Facts of the issue are that the assessee is a partnership firm engaged in the business of real estate. The Assessee for the AY 2015-16 had filed its return of income u/s 139 of the Act on 14.10.2016 declaring total income of Rs. 42,39,920/- and for 2016-17 filed its return of income u/s.139 of the Act on 19/10/2016 declaring total income of Rs. 28,39,380/-. 5.1 A search and seizure operation under section 132 was conducted on 03.01.2019 in the case of Shri M. Chandrashekar Group and Others. In this connection, certain evidences pertaining to the Assessee were seized and after recording satisfaction, notice under section 153C of the Act was issued to the Assessee on 11.03.2021 requiring the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings have been initiated and it cannot be a fresh ground of which assessee has no notice. 5.7 The ld. A.R. further submitted that the Jodhpur Bench of this Tribunal in the case of Kansara Bearings Ltd vs. ACIT (2013) 35 taxmann.com 188 (Jodhpur-Trib) has held that the AO has to clearly show-cause assessee as to which of two defaults, [i.e., assessee has concealed particulars of his income or furnished inaccurate particulars of such income] have been committed by assessee and only when assessee is put to that defence penalty under section 271(1)(c) can be imposed. 5.8 He further submitted that the jurisdictional High Court of Karnataka in the case of CIT v Manjunatha Cotton Ginning Factory (2013) 359 ITR 565 (Karnataka) has also held that taking up the penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law. 5.9 Given the above, he submitted that since it is clear from the notice issued by the AO under section 274 read with section 271(1)(c) of the Act that the penalty proceedings in the case of the Assessee has been initiated for 'furnishing inaccurate particulars of income'. The AO while passing the penalty order has comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 for furnishing inaccurate particulars of income. 7.1.1 Similar is the position for the assessment year 2016-17. 7.2 Accordingly, he issued a notice for levy of penalty u/s 274 of the Act and this fact was also recorded by ld. AO in the penalty order passed by him in para 5 in assessment year 2015-16, which is as follows: 5. Assessment u/s 143(3) r.w.s. 153C have been completed on 7.9.2021 accepting the return income filed in response to the notice u/s 153C. Since, income offered in the return of income was due to the search proceeding, a penalty notice was issued to the assessee u/s 271(1)(c) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income. Show cause notices were issued to the assessee on 7.9.2021 and 14.1.2022. 7.3 Similarly, in para 4 in assessment year 2016-17, it was recorded as follows: 4. Assessment u/s 143(3) r.w.s. 153C have been completed on 7.9.2021 accepting the return income filed in response to the notice u/s 153C. Since, income offered in the return of income was due to the search proceeding, a penalty notice was issued to the assessee u/s 271(1)(c) of the Income Tax Act, 1961 for furnishing inaccura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity 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, in fact, it is penal in nature. In either event, the person who is accused of the conditions mentioned in Section 271 should be made known about the grounds on which they intend imposing penalty on him as the Section 274 makes it clear that assessee has a right to contest such proceedings and should have full opportunity to meet the case of the Department and show that the conditions stipulated in Section 271(1)(c) do not exist as such he is not liable to pay penalty. The practice of the Department sending a printed form here all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pal reported in 292 ITR 11 at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujrat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case o VIRGO MARKETING reported in 171 Taxmn 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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