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TMI Blog2019 (4) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance / addition in assessment order if the assessee has furnished inaccurate particulars of income or has concealed particulars of his income rather to be on the safer side he has invoked both the limbs of section 271(1) of the Act. So, we are of the considered view that this is not merely a case of serving a defective notice under section 274 r.w.s. 271(1) on the assessee rather it is a case of non-application of mind on the part of the AO to make himself satisfied as to under which limb of section 271(1)(c) he is going to initiate/levy the penalty on the assessee. Penalty under section 271(1)(c) cannot be levied merely on the basis of fact that in the penalty order, the AO has rightly levied the penalty for furnishing inaccurate particulars of income because when very initiation of the penalty proceedings are vitiated, as discussed in the preceding paras, the penalty order is not sustainable. - Decided in favour of assessee. - ITA No.2896/Del./2015 - - - Dated:- 29-3-2019 - Shri R.K. Panda, Accountant Member And Shri Kuldip Singh, Judicial Member For the Assessee : Shri Sanjay Sood, CA For the Revenue : Ms. Rinku Singh, Senior DR ORDER PER KULDIP SIN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 5. By moving a separate application, assessee sought to raise additional ground on the ground that the same goes to the root of the case which are as under :- That under the facts and circumstances the Assessing Officer has while issuing show cause notice for penalty, erred in, not specially pointing out that whether the penalty was proposed on concealment of particulars of income, or for furnishing particulars of income, initiation of penalty levied under section 271(1)(c) was thus vitiated and penalty u/s 271(1)(c) imposed needs to be deleted. 6. Keeping in view the fact that the additional ground sought to be raised by the assessee, which is a legal ground and can be raised at any stage of the proceedings, is otherwise necessary for complete adjudication of the controversy at hand, the application for additional ground is hereby allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorized representatives you may show cause in writing on or before the said date which will be considered before any such order is made under section 271(1)(c). Sd/- Assessing Officer (A.S. NEHRA) Assistant Commissioner of Income Tax Circle 5 (1), New Delhi. Delete inappropriate words and paragraphs. 11. Bare perusal of para 3 of the assessment order, available at pages 52 to 54 of the paper book, goes to show that at time of framing assessment itself, AO has not satisfied himself if the assessee has furnished inaccurate particulars of income or has concealed the particulars of income. For ready perusal, operative part of the assessment order is extracted as under :- I am fully satisfied that the additions as above amount to filing of inaccurate particulars and concealment of income by the assessee and deserve penalty u/s 271(1)(c). Penalty proceedings are initiated separately by issue of penalty show cause notice. 12. Further more, perusal of the notice issued u/s 274 read with section 271(1)(c) in order t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presumption is serious in nature and he had to pay penalty from 100% to 300% of the tax liability. As said provisions have to be held to be strictly construed, notice issued under Section 274 should satisfy the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended if the show cause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee. 60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and 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(1)(c) when it is a sine qua non for initiation or proceedings, the penalty proceedings should be confined only to those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen 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. 14. Hon ble Apex Court in case of CIT vs. SSA s Emerala Meadows - (2016) 73 taxmann.com 248 (SC) while dismissing the SLP filed by the Revenue quashing the penalty by the Tribunal as well as Hon ble High Court on ground of unspecified notice has held as under:- Section 274, read with section 271(1)(c), of the Income-tax Act, 1961 - Penalty - Procedure for imposition of (Conditions precedent) - Assessment year 2009-10 - Tribunal, relying on decision of Division Bench of Karnataka High Court rendered in case of CIT v. Manjunatha Cotton Ginning Factory [2013] 359 1TR 565/218 Taxman 423/35 taxmann.com 250, allowed appeal of assessee holding that notice issued by Assessing Officer under section 274 read with section 271 (1 )(c) was bad in law, as it did not specify under which limb of section 271 (1 )(c) penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plea of the assessee either before the Assessing Officer or before the first Appellate Authority or before the Tribunal or before this Court when the Tax Case Appeals were filed and it was only after 10 years, when the appeals were listed for final hearing, this issue is sought to be raised. Thus on facts, we could safely conclude that even assuming that there was defect in the notice, it had caused no prejudice to the assessee and the assessee clearly understood what was the purport and import of notice issued under Section 274 r/w. Section 271 of the Act. Therefore, principles of natural justice cannot be read in abstract and the assessee, being a limited company, having wide network in various financial services, should definitely be precluded from raising such a plea at this belated stage. 17. Thus, for the above reasons, Substantial Questions of law Nos.1 and 2 are answered against the assessee and in favour of the revenue. The additional substantial question of law, which was framed is rejected on the ground that on facts the said question does not arise for consideration as well as for the reasons set out by us in the preceding paragraphs. 17. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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