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TMI Blog2017 (3) TMI 1641X X X X Extracts X X X X X X X X Extracts X X X X ..... es raised in these appeals are inter-connected, therefore, for the sake of convenience, they are clubbed, heard combinedly and disposed of in this consolidated order. Appeal wise adjudication is given in the following paras of this order. 2. Both these appeals are filed against the decision of the CIT (A)-41, Mumbai dated 28.3.2014 in connection with the penalty u/s 271(1)(c) of the Act. Briefly stated relevant facts of the case are that the assessee is a public limited company engaged in the business of real estate with a focus on premium residential apartments, commercial premises, malls and hotels. There was a search action on the assessee on 23.12.2010. Assessee offered undisclosed income in this case and filed the return of income disclosing the same. This additional income of ₹ 11.23 Crs (rounded of) relates to the bogus purchases from three parties namely (i) M/s. J.B. Interlink; (ii) M/s. P.K. Trading Co and (iii) M/s. N.B. Enterprises. Assessment was completed and the penalty u/s 271(1)(c) was ordered vide the order dated 26.9.2013. In the said penalty order, AO imposed the minimum penalty of ₹ 1,02,77,764/-. 3. During the first appellate proceedings, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our attention to the order of the Tribunal in the case of Shri Samson Perinchery in ITA Nos. 4625 to 4630/M/2013 dated 11.10.2013 Ld AR mentioned that under similar factual matrix of that case, relying on the judgment of the Hon‟ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton Ginning Factory [2013] 35 Taxmann.com 250 (Kar.) and many others, the Tribunal held that the penalty levied is unsustainable. Ld AR also mentioned that the said decision has attained finality at the level of the Hon‟ble Apex Court. Replying to the Ld AR‟s argument, relying on the judgment of the Hon‟ble Apex Court in the case of MAK Data P. Ltd vs. CIT in Civil Appeal No.9772 of 2013, Ld AR submitted that the said case is distinguishable on facts but the with reference to the confusion in the minds of the AO on the jurisdiction and the satisfaction of the AO is one of the issues adjudicated in the said judgment. 7. On hearing both the parties and on going through the above extracted portions from the orders of the AO, it is obvious that the officers suffer from ambiguity as to which limb of the clause-(c) of section 271(1) of the Act should be invoked. The relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same and should not leave the scope for imaginations and surmises. At the end, we find that the penalty was actually levied for concealment of (particulars) of income‟ which is evident from para 4 of the assessment order which reads as under: 4. From the above, I am satisfied that the assessee has concealed the particulars of income so as to evade tax and as such penalty u/s 271(1)(c) of the Act is leviable. The tax on the undisclosed income of ₹ 31,00,790/- (including foreign travel) works out to ₹ 9,30,200/-. Accordingly, I hereby levy a minimum penalty at 100% of tax i.e., ₹ 9,30,200/-. 11.1. Further, we have also perused the notice issued u/s 274 of the Act and the relevant para reads as under: have concealed the particulars of your income or ________ Furnished inaccurate particulars of such income Knowingly or otherwise, the AO has not bothered to fill the blanks with appropriate limb of the provisions of section 271(1)(c) of the Act. 12. The above extracts reveal that the AO has not applied his mind to the fact for which reason of the penalty, the notices were issued. The above documents reveal that the penalty proceedings were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 satisfaction of the existence of the grounds mentioned in Section 271(l)(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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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