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TMI Blog2019 (1) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... and was constructing a lodge building which was at completion stage. On the basis of books impounded, it was ascertained that the actual investment in construction of the lodge building was Rs. 2,41,20,000/-, whereas the explained sources of investment was only Rs. 1,49,81,000/-. The unexplained difference in investment in construction of the aforesaid lodge building amounting to Rs. 74,86,000/- was admitted as being out of undisclosed income in the hands of the assessee and her husband @ 50% each thereof i.e., at Rs. 37,43,000/- each. Proceedings u/s 147 of the Act were initiated in this regard for Assessment Year 2012-13 and notice u/s 148 of the Act was issued on 29.08.2013, in response to which the assessee filed a return of income on 13.01.2015 declaring total income of Rs. 36,25,110/-. The order of assessment was accordingly completed u/s 143(3) r.w.s. 147 of the Act vide order dated 30.03.2015 wherein the assessee's income was accepted as returned at Rs. 36,25,110/- and penalty proceedings u/s 271(1)(c) of the Act were simultaneously initiated by issue of notice u/s 274 r.w.s. 271 of the Act dated 30.03.2015. 2.2 Penalty proceedings were taken up and vide order dated 30.09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve heard the rival contentions and perused and carefully considered the material on record and the legal precedents in this regard. In our view the legal issue in the additional ground raised (Supra) would go to the root of the matter and can be decided on the basis of material already on record. Following the ratio of the decision of the Hon'ble Apex Court in the case of NTPC Ltd; (Supra), we admit the additional ground (Supra) for adjudication. 4 Ground No. 1 4.1 In this ground (Supra), the sum and substance of the assessee's contentions are that the penalty proceedings initiated by the AO for asst. year 2012-13 vide notice issued u/s 274 r.w.s 271 of the Act dated 30/03/2015 for levy of penalty u/s 271(1)(c) of the Act, is defective. (A copy of the said notice is placed on record). A perusal thereof reveals that the Assessing Officer has not struck off the relevant portion in the show cause notice and therefore the show cause notice does not specify the charge against the assessee as to whether the charge is of concealment of particulars of income or furnishing of inaccurate particulars of income. In this regard the ld AR for the assessee has placed reliance on the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of income or concealing particulars of income that penalty u/s 271(1)(c) of the Act is sought to be levied. 4.3.2 The Hon'ble Karnataka High Court in the case of M/s Manjunatha Cotton & Ginning Factory in (359 ITR 565) (Kar) has held that a notice issued u/s 274 r.ws 271 of the Act without specifying the nature of default; i.e. whether the notice is issued for concealment of particulars of income or furnishing of inaccurate particulars of income; is invalid and the consequential penalty proceedings/order are also not valid. The relevant portion of the aforesaid judgment of the Hon'ble Karnataka High Court (Supra) at paras 59 to 61 are extracted hereunder:- "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 fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en 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 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). Concealme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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