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TMI Blog2017 (11) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... 013 (7) TMI 620 - KARNATAKA HIGH COURT) we hold that the notice issued under section 274 r.w.s. 271 of the Act dated 29.11.2007 for A.Y. 2005-06 for initiating penalty proceedings under section 271(1)(c) of the Act in the case on hand is invalid and consequently, the penalty proceedings are also invalid. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... rnative energy International Ltd. and the Tata power company ltd which were not offered to tax in its Return of Income. The assessment was finalized by the AO by making addition of ₹ 5,01,34,136/- on account of fees earned by the assessee which were not declared at the time of filing the return. Simultaneously penalty proceedings u/s 271(1)(c) were initiated separately and penalty of ₹ 52,94,165 was levied for furnishing inaccurate particulars of income vide order dated 23.03.15. 4. Aggrieved by the order of the DCIT, assessee filed appeal before Ld. CIT(A) and the Ld. CIT(A) after considering the case of both the parties dismissed the appeal filed by the assessee and confirmed the order of levy of penalty. Aggrieved by the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s can be initiated on various ground set 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 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 me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 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 groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncealment of income and furnishing inaccurate particulars of income carry different connotations, The Gujarat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 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. Thom, 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. The conclusion d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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