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TMI Blog2018 (7) TMI 1319X X X X Extracts X X X X X X X X Extracts X X X X ..... oel, CA. For The Revenue : Sh. Amit Jain, Sr. DR ORDER PER: KULDIP SINGH, JM The Appellant, M/s Kaveri Infrastructure Pvt. Ltd., New Delhi- (hereinafter referred to as the Assessee ) by filing the present appeal, sought to set aside the impugned order dated 22.12.2014 passed by Ld. CIT(A)-24, New Delhi, affirming the penalty order dated 18.03.2013 passed u/s 271(1)(c) of the Income-tax Act, 1961 (for short the Act ), qua Assessment Year 2008-09, on the grounds that:- 1.(i) That on the facts and circumstances of the case, the Ld.CIT(A) is not justified in confirming penalty of ₹ 18,09,936/- on the alleged ground of concealment/furnishing of inaccurate particulars of income. ( ii) That various additions and disallowance being subject matter of dispute are based on change of opinion and are also not in conformity with provisions of sec. 153A of the Income Tax Act, 1961. ( iii) That the penalty has been imposed without recording proper satisfaction and application of mind. 2. That even otherwise, mere addition or disallowance could not be the basis for concealment as all the particulars relating to the additions and disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclared income of the assessee was accepted on the basis of audited books of accounts of the assessee. 6. In the backdrop of the aforesaid undisputed facts and circumstances of the case, order passed by the lower revenue authorities and argument addressed by the Ld. Authorized Representatives of the parties to the appeal, the sole question arises for determination in this case is:- As to whether the assessee has concealed particulars of income or has furnished inaccurate particulars of such income during assessment proceedings? 7. The Ld. AR for the assessee challenging the impugned order contended inter alia that since the penalty levied on the basis of additions/disallowances made by the Assessing Officer is on the basis of change of opinion , the same is not sustainable; that AO in order to initiate the penalty proceedings prima facie failed to satisfy himself that, as to whether the assessee has Concealed particulars of income or has furnished inaccurate particulars of income, in the show-cause notice issued under section 271(1)(c)/274 of the Act and relied upon the decision of Hon ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst any person so as to move the penal provisions against him, he/she should be specifically made aware of the charges to be leveled against him/her. 11. Hon ble High Court of Karnataka in case of CIT vs. Manjunatha Cotton and Ginning Factory (supra) while deciding the identical issue held that when the AO has failed to issue a specific show-cause notice to the assessee as required u/s 274 read with section 271(l)(c), penalty levied is not sustainable. The operative part of the judgment is reproduced as under:- 59. As the provision stands, the penalty proceedings can be initiated on various ground set out 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 proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 imposition of penalty is not valid. The validity 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. 61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Factory (supra) are squarely applicable to the facts and circumstances of the case as the AO has miserably failed to specify in the notice issued under section 274 read with 271(l)(c) of the Act, as to whether the assessee has concealed the particulars of his income or has furnished inaccurate particulars of such income , so in these circumstances, penalty levied by the AO and confirmed by Ld. CIT (A) is not sustainable in the eyes of law. 14. Moreover, the Ld. AR for the assessee brought on record the decision rendered by the Co-ordinate Bench of Tribunal in its own case for Assessment Year 2005-06, 2006-07 2007-08 wherein the disallowance made by the AO on account of site expenses u/s 37(1), disallowance of project consultancy expenses and technical support expenses and adhoc disallowance of site labour expenses have been deleted and issue as to the remaining disallowances of unexplained cash transactions has been restored back to the AO by the Tribunal vide order dated 16.3.2018. So, when the additions/disallowances have been deleted/remanded back to AO, penalty levied u/s 271(1)(c) is not sustainable. Even penalty levied on the assessee in AY 2005-06, 2006-07 2007-08 on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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