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TMI Blog2016 (9) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2. During the course of hearing of the appeals, the ld. counsel for the assessee has raised an additional ground challenging the validity of initiation of penalty proceedings. The additional ground raised in these appeals is extracted hereunder:- " The order of the learned lower authorities u/s. 271(1)(c) is liable to be cancelled for the reason that the notice u/s. 274 does not strike off the portion relating to levy of penalty for delay in filing Return of Income and also does not indicate whether it is a case of "Concealment of income" or "furnishing of inaccurate particulars of income" and also for the further reason that even the satisfaction recorded by Learned AO does not indicate whether it is a case of concealment of income or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le High Court of Gujarat in the cases of National Textiles v. CIT, 249 ITR 125 (Guj) & CIT v. Manu Engineering Works, 122 ITR 306 (Guj); and the decision of this Tribunal in the case of Shri E. Krishnappa v. ITO in ITA No.313 to 315/Bang/2014 dated 14.08.2015. 5. Per contra, the ld. DR has submitted that mere non-striking a particular column in the notice would not be that much to fatal the validity of penalty proceedings. 6. Having carefully examined the notices issues u/s. 274 r.w.s. 271(1)(c) of the Act, we find that notices were issued on a printed proforma in which the AO did not identify, whether the assessee has concealed particulars of income or furnished inaccurate particulars of such income. Now the question arises whether, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 section 274 makes it clear that the 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 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally 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 the 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 the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty 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." 7. This aspect was also examined by the Hon'ble High Court of Gujarat in the case of National Textiles v. CIT (supra) and CIT v. Manu Engineering Works (supra). Following the aforesaid judgments, this Bench of the Tribunal in the case of E. Krishnappa v. ITO (supra) and in the case of M/s. SLN Traders (in ITA No.1045/Bang/2015 & CO NO.210/Bang/2015 dated 30.6.2016) has also taken a view tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cancel them." 8. Turning to the facts of the instant case, we find that undisputedly the AO has not identified in the notices as to whether the penalty proceedings are initiated for concealment of income or furnishing of inaccurate particulars of such income. Therefore, following the aforesaid judgment of Hon'ble jurisdictional High Court, we are of the considered view that on account of defective notice issued for initiation of penalty proceedings, the penalty order passed by the AO is not sustainable in the eyes of law. We accordingly set aside the order of the CIT(Appeals) as well as the Assessing Officer and delete the penalty on account of wrong initiation of penalty proceedings. 9. Since the penalty proceedings are quashed, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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