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TMI Blog2016 (11) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of wrong initiation of penalty proceedings. - Decided in favour of assessee - ITA No. 947/Bang/2014 - - - Dated:- 18-10-2016 - Shri Sunil Kumar Yadav, Judicial Member And Shri A. K. Garodia, Accountant Member Appellant by : Shri Ashok A. Kulkarni, Advocate Respondent by : Shri A.R.V. Sreenivasan, Jt. CIT (DR) ORDER Per Sunil Kumar Yadav, Judicial Member This is an appeal filed by the assessee against the order of CIT(Appeals) inter alia on the following grounds:- 1. The order of the Commissioner of Income Tax (Appeals) is opposed to law and facts of the case. 2. Neither in respect of the sum of ₹ 8,47,981/- being the addition in respect of creditors and ₹ 3,88,925/- being the sustained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r there was concealment/furnishing of inaccurate particulars, the order of penalty cannot be sustained. 8. The appellant craves for leave to add, to delete from or amend the ground of appeal. 2. During the course of hearing, the ld. counsel for the assessee has challenged the validity of these proceedings on the ground that in the show cause notice for levying the penalty u/s. 271(1)(c), the AO has not specified as to on what ground the AO intends to levy penalty, whether it is on account of concealment of income or furnishing of inaccurate particulars. To explain these facts, he filed a copy of notice u/s. 274 of the Act. He has also placed reliance upon the orders of Tribunal and the judgment of jurisdictional High Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hips have analysed the provisions of section 274 for sending notices and for initiating proceedings u/s. 271(1)(c). The relevant observations of Their Lordships are extracted hereunder for reference:- 59. As the provision stands, the penalty proceedings can be initiated on various grounds 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 be discerned from the said order and if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct 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 the 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 places his version and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Pai reported in [2007] 292 ITR 11 (SC) at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of Manu Engineering Works reported in [1980] 122 ITR 306 (Guj) and the Delhi High Court in the case of CIT v. Virgo Marketing P. Ltd. reported in [2008] 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 concea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing initiated for concealment of particulars of income or for furnishing of inaccurate particulars of income. Such initiation of penalty proceedings has been held to be illegal by the Hon ble High Court of Karnataka in the case of Manjunatha Cotton Ginning Factory (supra). Following the aforesaid decision of the Hon'ble High Court of Karnataka in the case of Raveendhiraa L Others (supra), we hold that the notices issued under Section 274 rws 271 of the Act dt.29.12.2011 for Assessment Years 2007-08 to 2009-10 are bad in law for the reasons mentioned in the aforesaid orders and consequently hold the penalty orders passed in consequence of these defective, invalid notices also to be invalid and cancel them. 6. Turning to the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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