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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 ..... f assessee was illegal and bad in laws as it is not specifying particular charge on which the penalty has been imposed i.e for concealment of particulars of income or furnishing inaccurate particulars on income and is therefore liable to be quashed. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... on the accounting entries in the cash book, which shows that the appellant has incurred expenditure to the tune of ₹ 16,06,992/- from undisclosed sources of income. The second addition of ₹ 6,936/- is also based on the evidence found during survey i.e. excess stock found during survey action. As held by Apex Court in the case of M/s. Dharmendra Textile Processors (2007) 212 CTR (SC) 432 that metis rea is not an essential ingredient for a levy of penalty u/s. 271(l)(c) of the IT Act, 1961 since the same represents a civil liability. Also, as held by Hon'ble Gujarat High Court in the case of National Textiles (2001) 249 ITR 125 (Guj.), the facts and circumstances of the case show that there was a conscious concealment by the assessee as evident by the accounting entries in the cash book maintained and also stock physically found during survey action. Since the appellant has failed to explain these discrepancies, based on which, the impugned additions are made, the action of the assessing officer in levying penalty at ₹ 6,21,400/- u/s. 271(l)(c) of the IT Act, 1961 appears to be justified. The explanation given by the authorized representative during appellate p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of ₹ 6,21,400/- Assessee has also challenged the legality of notice u/s.274 r.w.s 271(1)(c) of the Act through its written submission. We observe that penalty of ₹ 6,21,400/- has been levied on unexplained expenditure u/s.69C of the Act at ₹ 16,06,992/- in the nature of negative cash balance appearing in the cash book of the assessee and on the addition of ₹ 6,939/- towards excess stock which were unearthed during the course of survey u/s.133A of the Act conducted on 03/03/2000. 9. We will firs take up alternate plea raised by the assessee challenging the legality of notice issued u/s.274 r.w.s 271(1)(c) of the Act on the perusal of impugned notice dated 17/02/2003, we notice that Ld.AO has merely ticked the following phrase: "Have concealed the particulars of your income or ……………………. …….. furnished inaccurate particulars of income." From the above, it seems that Ld.AO has not struck off either of one reason and has issued notice taking both the basis of imposing penalty by alleging that the assessee has concealed the particulars of income as well as furnishing inaccurate of income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings 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 4 ITA No. 41/RJT/2015 Shri K.C. Varghese cannot be sustained in law. It is needless to point out 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 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 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 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice issued under s.274 read with s.271(1)(c) shows that the relevant part of the notice has not been struck off. Thus, it can be inferred that there is lack of application of mind by the AO. The vagueness and ambiguity is claimed to have prevented the Assessee of reasonable opportunity to defend its case. Thus, definite prejudice has caused to the Assessee. It is the requisite of law that the notice to the assessee should be specific. The Revenue has not been able to point out that the so-called ambiguous notice has not impaired or prejudiced the right of the assessee to reasonable opportunity of being heard. It therefore must folIow that the notices issued proposing penalty were illusory and the assessee was incapacitated to defend its case. The decisions quoted on behalf of the assessee in the case of Samson Perinchery (Bombay) & Manjunatha Cotton (Karnataka) [supra] are applicable to the facts of the case. The penalty notices, thus, issued are rendered invalid and cannot be sustained." 11. Respectfully, following the judgment of Hon'ble Karnataka High Court as confirmed by Hon'ble Apex Court, other decisions of Tribunal and our discussions above, we are of the considered opin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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