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TMI Blog2015 (8) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard are not required to be set aside to the file of the learned CIT (Appeals) as requested by the learned Departmental Representative. The fact that it is clear that the impugned notices under Section 274 rws 271 of the Act dt.29.12.2011 do not have the appropriate portions marked to specify as to whether the penalty is proposed to be levied for concealment of income or for furnishing of inaccurate particulars of income; which fact has not been disputed by Revenue and the defects being not curable, we are of the opinion that in view of the factual and legal reasoning rendered above, there is no requirement for us to set aside the additional ground to the file of the learned CIT (Appeals) for consideration. Since we have cancelled the penalties levied u/s.271(1)(c) of the Act for Assessment Years 2007-08 to 2009-10 in the case on hand on the basis of our adjudication of the preliminary issue of the validity of the defective notices issued under Section 274 rws 271 of the Act dt.29.12.2011 as raised in additional Grounds raised in the other grounds become academice. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009-10 were concluded as under :- Asst. Year Returned Income Revised/Returned (Rs.) Assessed Income (Rs.) Order Under Section Date of order. Asst. Year Returned Income Revised/Returned (Rs.) Assessed Income (Rs.) Order Under Section Date of order. 2007-08 84,73,277 86,23,280 143(3) rws 147 29.12.2011 2008-09 80,45,998 81,96,000 143(3) rws 147 29.12.2011 2009-10 27,45,905 28,95,900 143(3) 29.12.2011 2.3 Consequent to the passing of orders of assessment for Assessment Years 2007-08 to 2009-10 dt.29.11.2011, the Assessing Officer took up penalty proceedings under Section 271(1)(c) of the Act for these three assessment years which were initiated by issue of separate notices under Section 274 rws 271 of the Act dt.29.12.2011 along with the orders of assessment for the aforesaid three assessment years. The Assessing Officer was of the view that but for the survey action under Section 133A of the Act, the assessee would not have declared the income earned by him from the joint venture carried out with Sri M.N. Reddy, in forming a 'Singapore Layout'. The Assessing Officer accordingly held that the assessee had concealed particulars of his income and furnished inacc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y passed by the learned Commissioner of Income Tax (Appeals) - III Bangalore, under section 271[1][c] of the Act, is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the Appellant's case. 2. The Appellant denies himself liable to the penalty of ₹ 28,12,034/- confirmed by the learned Commissioner of Income Tax (Appeals) - III, Bangalore under section 271[1][c] of the Act under the facts and circumstances of case. 3. The learned Commissioner of Income Tax (Appeals) ought to have allowed the appeal of the appellant since the AO has passed the order without assumption of proper jurisdiction, as the mandatory conditions for invoking the provisions of section 271[1][c] of the Act has not been complied with under the facts and circumstances of the case. 4. The Commissioner of Income Tax (Appeals) was not justified in confirming the penalty as the levy of penalty under section 271[1][c] of the Act is not automatic and the learned CIT (A) ought to have deleted the penalty under the facts and circumstances of the case. 5. The order of penalty is bad in law for the reason that the Notice for initiation of penalty as to whether it is conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horised Representative for the assessee filed before us copies of the notices issued under Section 274 rws 271 of the Act dt.29.12.2011 issued by the Assessing Officer for initiating penalty proceedings for Assessment Years 2007-08 to 2009-10. It was brought to our notice that in the show cause notices issued to the assessee under Section 274 rws 271 of the Act, the Assessing Officer has not spelt out as to whether the assessee has concealed the particulars of his income or furnished inaccurate particulars of his income. The learned Authorised Representative drew the attention of the Bench to the said notices and to the fact that the Assessing Officer has placed a tick mark in the paragraph "… concealed particulars of your income or furnished inaccurate particulars of such income" without deleting the inappropriate words and paragraphs, as he/she is required to do as per the instructions at the bottom of the notices. In other words, the learned Authorised Representative submits, the show cause notices issued under Section 274 rws 271 do not spell out the charge against the assessee; i.e. as to whether the assessee is guilty of having concealed particulars of income or of hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued under Section 274 rws 271 of the Act is a jurisdictional matter, which is not a curable defect as per the statute and also the decision of the Hon'ble High Court of Karnataka in the case of CIT V Manjunatha Cotton & Ginning Factory reported in 359 ITR 565 and therefore all the facts and the legal matrix being available before the Tribunal for its decision, no purpose would be served by remanding the additional ground to the file of the CIT (Appeals). 4.4.1 We have heard the rival contentions and perused the material on record on the issue of the additional grounds raised by the assessee challenging the validity of the impugned penalty order levying penalty u/s.271(1)(c) of the Act for the Assessment Years 2007-08 to 2009-10 on the basis of defective notices issued by the Assessing Officer under Section 274 rws 271 of the Act dt.29.12.2011 for initiating penalty proceedings u/s.271(1)(c) of the Act. On a careful appreciation thereof, we find that these grounds are pure question of law and do not involve investigation of any facts otherwise than those on the records of the department. Taking into consideration the matter before us, we are of the considered view that, in the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 farm where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law when the consequences of the assessee not rebutting the initial presumption is serious in nature and he had to pay penalty from 100% to 300% of the tax liability. As the said provisions have to be held to be strictly construed, notice issued under Section 274 should satisfy the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended if the show cause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee. 60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 171 Taxman 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 limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind." 09. The final conclusion of the Hon'ble Court was as follows: "63. In the light of what is stated above, what emerges is as under: a) Penalty under Section 271(1)(c) is a civil liability. b) Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. c) Willful concealment is not an essential ingredient for attracting civil liability. d) Existence of conditions stipulated in Section 271(1)(c) is a sine qua non fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiated by the appellate authority and not the Assessing Authority. p) Notice under Section 274 of the Act should specifically state the grounds mentioned in Section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income q) Sending printed form where all the ground 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 one limb and finding the assessee guilty of another limb is bad in law. t) The penalty proceedings are distinct from the assessment proceedings. The proceedings for imposition of penalty though emanate from proceedings of assessment, it is independent and separate aspect of the proceedings. u) The findings recorded in the assessment proceedings in so far as "concealment of income" and "furnishing of incorrect particulars" would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me; which fact has not been disputed by Revenue and the defects being not curable, we are of the opinion that in view of the factual and legal reasoning rendered above, there is no requirement for us to set aside the additional ground to the file of the learned CIT (Appeals) for consideration. 4.5.2 As regards the decision cited by the learned Departmental Representative CIT V Tolaram Hassomal (298 ITR 22) (MP), the co-ordinate bench of this Tribunal in the case of Smt. K. R. Prabhavati in M.P. No.5/Bang/2014 (in ITA No.234/Bang/2011) had occasion to examine the said decision. The co-ordinate bench in its order dt.10.4.2015 observed that it is not the decision of the jurisdictional High Court by the Hon'ble High Court of Karnataka and is also contrary to the law laid down by the Hon'ble Apex Court in the case of NTPC Ltd. in 229 ITR 383 (SC). The relevant portion of the order of the co-ordinate bench at para 10 thereof reads as under :- " … As far as the decision of the Hon'ble Madhya Pradesh High Court in Tolaram Hassomal (supra) is concerned, it is not the decision of the jurisdictional High Court and is contrary to the law laid down by the jurisdictional High Court viz. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Bhopal Sugar Mills Limited; 233 ITR 429 wherein it was held that there is no prohibition on the power of the Tribunal to entertain an additional ground which according to the Tribunal arises in the matter and for just decision of the case. In view of the above discussion and decision of the Hon'ble Supreme Court in the case of National Thermal Power (supra) and the latest decision of the Hon'ble jurisdictional High Court in the case of Turquise Investment & Finance Limited (supra), which was after the date of decision cited by the learned CIT DR in the case of Tolaram Hassomal (supra), we 13 are inclined to follow the latest decision of the Hon'ble jurisdictional High Court decided after considering the decision of Hon'ble Supreme Court reported at 267 ITR 654. As all the facts relating the additional legal grounds taken before us are already on record, we are inclined to entertain the additional grounds which are purely legal in nature and accordingly proceed to decide the same." From the above discussion, it is clear that when a legal question is raised, the Tribunal cannot be precluded from admitting the same and considering it in accordance with law. 5. Since we ha ..... 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