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TMI Blog2015 (9) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings under one default or limb of section 271(1)(c) of the Act, but levied for another default or limb of that section - Decided in favour of assessee. - I .T.A. No.1848 to 1851/Mum/2012 - - - Dated:- 7-1-2015 - S/SHRI H.L. KARWA AND B.R.BASKARAN, JJ. For the Appellant : Shri Dharmesh Shah For the Respondent : Shri.Manjunatha Swamy ORDER The order of the Bench was delivered by B. R. Baskaran (Accountant Member).- All the four appeals filed by the assessee are directed against the common order passed by the learned Commissioner of Income-tax (Appeals)-1, Thane, confirming the penalty levied under section 271(1)(c) of the Income-tax Act, 1961 (the Act) for the assessment years 2003-04 to 2006-07. 2. At the time of hearing, learned counsel for the assessee invited our attention to the additional ground raised by the assessee, wherein the assessee had challenged the validity of penalty orders. The learned authorised representative submitted that the Assessing Officer has stated in the assessment order for the years under consideration that the assessee has concealed its particulars of income and hence penal proceedings are initiated under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings have been initiated for both defaults which fact is evident from the penalty notices issued by the Assessing Officer. The learned Departmental representative further submitted that the two types of defaults mentioned in section 271(1)(c) ultimately lead to evasion of tax through concealment of income and the penalty is ultimately levied on the basis of amount of tax sought to be evaded. This is very much made clear under Explanation 1 to section 271(1)(c), which provides for deemed concealment of income. 5. We have heard the parties on this legal issue and perused the record. We notice that the Assessing Officer has observed as under in the assessment order relating to the assessment year 2003-04 : Since the assessee had not offered this amount of ₹ 7,63,600 in its return of income filed under section 139(1) of the Income-tax Act, the assessee has concealed his particulars of income and penal proceedings are initiated under section 271(1)(c) of the Act. The identical observations have been made by the Assessing Officer in other years under consideration also. Since the penalty notices are issued during the course of assessment proceedings, in our view, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Ginning Factory [2013] 359 ITR 565 (Karn) has observed and held as under : 12. The above extracts reveal that the Assessing Officer has not applied his mind to the fact for which reason of the penalty, the notices were issued. The above documents reveal that the penalty proceedings were initiated for 'failure to furnish inaccurate particulars of income and however, the penalty was levied for concealment of income'. 12.1. In this regard, we have perused the said paras 59 to 61 of the hon'ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory [2013] 359 ITR 565 (Karn) and the same read as under (page 599) : 'Notice under section 274 59. As the provision stands, the penalty proceedings can be initi ated on various ground set out therein. If the order passed by the authority 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled 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 imposition of penalty is not valid. The validity of the order of penalty must be determined with reference to the infor mation, facts and materials in the hands of the authority imposing the penalty at the time the order was passed and further discovery 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 inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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