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TMI Blog2017 (5) TMI 1350X X X X Extracts X X X X X X X X Extracts X X X X ..... king addition of Rs. 16,06,992/- u/s.69C of the Income Tax Act, 1961 (in short referred as 'Act') as unexplained expenditure and addition of Rs. 6,936/- towards excess stock found during the course of survey. Addition towards unexplained expenditure u/s.69C of the Act was made on the basis of negative cash balance of Rs. 16,02,992/- on 11/08/1999 in the assessee's cash books. It was contended by the assessee before Learned Assessing Officer (in short Ld.AO) that the alleged amount of Rs. 16,06,992/- represents share application money collected from the Directors but not credited in the books of account. 4. In the quantum appeal assessee did not contested the addition of Rs. 6,936/- however addition u/s.69C of the Act at Rs,16,06,992/- which was confirmed by Ld.CIT(A). Subsequently, post order of CIT(A) dismissing assessee's appeal, penalty proceedings u/s.271(1)(c) of the Act were initiated and order imposing penalty of Rs. 6,21,400/- was passed on 21/03/2012. 5. Aggrieved assessee filed appeal before Ld.CIT(A) against the penalty imposed u/s.271(1)(c) of the Act but failed to succeed as Ld.CIT(A) confirmed the penalty u/s.271(1)(c) of the Act by observing as follows: 6. I have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) of the IT Act, 1961. The same stands confirmed. All the grounds raised by the appellant are dismissed. 6. Aggrieved assessee in now in appeal before Tribunal. None appeared at assessee's behest, however, written submission has been placed on record, contending legality of the notice issued u/s.271 r.w.s 271(1)(c) of the Act dated 17/02/2013. It has been further submitted that alleged notice does not specify as to whether it is issued for concealing the particulars of income or furnishing inaccurate particulars of income. It is un clear from the notice and further in the penalty order u/s.271(1)(c) assessee has been penalized for willfully furnishing inaccurate particulars of income and concealing particulars of income. It has been further submitted that in the series of judgments more particularly in the judgment of Hon'ble Karnataka High Court-359 ITR 565 (Karn.) in the case of Manjunath Cotton & Ginning Factory wherein it is held that "notice is not specifying the particular charge for which proceedings are initiated than, such notice is illegal and bad in law and all subsequent actions taken thereon are void and initio." Reliance has also been placed by assessee on the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.271(1)(c) of the Act. From the above facts it can be inferred that Ld.AO was unable to make complete application of mind to assess the basis of imposing the penalty. Further Revenue, has been unable to prove that the impugned notice is not impaired or prejudice to the right of assessee for providing reasonable opportunity of being heard in order to defend its case for the specific reason for which penalty is imposed. 10. We further observe that in the impugned penalty order u/s.271(1)(c) Ld.AO has mentioned in para 9 which reads as follows: "In the given facts, it can very well be held that the assessee has wilfully furnished the inaccurate particulars of income and has concealed particulars of income with an intention to evade tax." 10.1 From the perusal of the above findings it is crystal clear that penalty proceedings were initiated on either of the two reasons whereas penalty order shows that assessee was guilty for both the reasons i.e concealment of particulars of income and furnishing inaccurate particulars of income. We further observe that similar issues dealing with the legality of notice u/s.274 w r.w.s 271(1)(c) of the Act have been adjudicated by the Co-ordina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the order of penalty must be determined with reference to the information, 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." This was followed by the Hon'ble Karnataka High Court in the decision in the case of CIT vs M/s. Maganur Builders in ITA No. 616/2015 dated 28.7.2016. The Hon'ble Jurisdictional High Court considered this issue in the case of Jyoti Ltd. (supra), Whiteford India Ltd. (supra), New Sorathia Engg. Co. (supra) and Manu Engineering Works (supra). Finding of the Assessing Officer as extracted in Para 6 of Jyoti Ltd. (supra) is similar to the order in this case, and it is as follows :- "In view of the above facts, it is clear that the assessee concealed income/furnished inaccurate particulars of income. I, therefore, consider it a fit case for levy of penalty under Section 271(1)(c)". 6. On a careful reading of the decisions relied upon by the assessee, it is, therefore, clear that drawing up penalty proceedings for one offence and finding the assessee guil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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