9911796707
TMI Blog2016 (11) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... editors and Rs. 3,88,925/- being the sustained addition in respect of alleged inflation of wages, the provision of section 271 (1 )(C) are not attracted. 3. The true tests laid down by the binding decision of the Karnataka High Court in 359 ITR 565 have not been satisfied and hence no penalty u/s. 271 (1 )(C) is exigible. 4. It should have been appreciated that there was no "direction" in the assessment order for action u/s. 271 (1)(C) as clarified by the above decision and therefore the provisions of 271 (1B) do not come to the assistance of the department to justify the levy of penalty and therefore, the law prior to the introduction of that sub-section would be operative and on that basis, no penalty is leviable. 5. The alternat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional High Court in the case of CIT & Anr. V. Manjunatha Cotton & Ginning Factory reported in 359 ITR 565 (Karn). Copy of the judgment of the High Court is placed on record. 3. Per contra, the ld. DR has submitted that mere non-striking a particular column in the notice would not be that much fatal to the validity of penalty proceedings. 4. Having carefully examined the notice issued u/s. 274 r.w.s. 271(1)(c) of the Act, we find that notice was issued on a printed proforma in which the AO did not identify, whether the assessee has concealed income or furnished inaccurate particulars of such income. Now the question arises whether, it is necessary to identify in the notice itself that the proceedings u/s. 271(1)(c) are initiated either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 pay penalty. The practice of the Department sending a printed form where all the grounds mentioned in se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 penalty proceedings is not identical with the ground on which the penalty was imposed, the impositio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 5. This aspect was also examined by the Hon'ble High Court of Gujarat in the case of National Textiles v. CIT 249 ITR 125 (Guj) and CIT v. Manu Engineering Works 122 ITR 306 (Guj). Following the aforesaid judgments, this Bench of the Tribunal in the case of E. Krishnappa v. ITO in ITA No.313 to 315/Bang/2014 dated 14.08.2015 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 that where the Assessing Officer has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. 7. Since the penalty proceedings are quashed, we find no justification to deal w ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
