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TMI Blog2019 (7) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... t the showcause notices issued in the case on hand under section 274 read with Section 271(1)(c) dated not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income . The show cause notice under section 271(1)(c) of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. - Decided in favour of assessee. - ITA No.521/Bang/2019 - - - Dated:- 17-7-2019 - Shri N.V. Vasudevan, Vice President And Shri Jason P Boaz, Accountant Member For the Appellant : Shri Bairav Kuttaiah, Advocate. For the Respondent : Shri Vikas Suryavamshi, Addl.CIT(DR) ORDER PER N.V. VASUDEVAN, VP: This is an appeal by the assessee against the order dated 16/01/2009 of the CIT(Appeals)-2, Bengaluru, relating to assessment year 2006-07. 2. In this appeal, th assessee has challenged the order of the CIT(Appeals) wherein the CIT(Appeals) confirmed the order of the AO imposing penalty on the assessee u/s 271(1)(c) of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the charge against the assessee is for concealing particulars of income or furnishing inaccurate particulars of income. 6. The learned DR placed reliance on the decision of the Hon'ble ITAT Bangalore Bench in the case of Shri P.M.Abdulla Vs. ITO ITA No.1223 1224/Bang/2012 order dated 17.10.2016 taking a view that absence of specific mention in the show cause notice under section 274 of the Act about the charge under section 271(1)(c) of the Act is not fatal to levy of penalty under section 271(1)(c) of the Act. In coming to the aforesaid conclusion, the Bench followed decision of Hon'ble Karnataka High Court in the case of CIT Vs. Sri Durga Enterprises (2014) Taxmann.com 442 (Karnataka). A Co-ordinate bench in the case of Shri A Nagarju (ITA No.2196/Bang/2016 dated 6/4/2018), has considered the decision cited by the learned DR in the case of P.M.Abdullah (supra) and has held that the same is contrary to the decision of Hon'ble Karnataka High Court in the case of Manjunatha Cotton Ginning Factory Ltd., (supra) and therefore cannot be followed. The decision rendered in the case of Sri Durga Enterprises (supra) was in a totally different context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of CIT Anr. v. Manjunatha Cotton and Ginning Factory (supra) has laid down the following principles to be followed in the matter of imposing penalty under section 271(1)(c) of the Act. NOTICE UNDER SECTION 274 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 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 mentioned in Section 271 should be made known about the grounds on which they intend imposing penalty on him as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty 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. 6.1 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 whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pai reported in 292 ITR 11 at page 19 has held that concealment of income and fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of assessment levying tax and interest and has paid tax and interest that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty. unless it is discernible from the assessment order that. it is on account of such unearthing or enquiry concluded by authorities it has resulted in payment of such tax or such tax liability came to be admitted and if not it would have escaped from tax net and as opined by the assessing officer in the assessment order. l) Only when no explanation is offered or the explanation offered is found to be false or when the assessee fails to prove that the explanation offered is not bonafide. an order imposing penalty could be passed. m) If the explanation offered, even though not substantiated by the assessee. but is found to be bonafide and all facts relating to the same and material to the computation of his total income have been disclosed by him, no penalty could be imposed. n) The direction referred to in Explanation IB to Section 271 of the Act should be clear and without any ambiguity. o) If the Assessing Officer has not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad in law and invalid for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. The Id. Counsel further brought to our notice that as against the decision of the Hon ble Karnataka High Court the revenue preferred an appeal in SLP in CC No.11485 of 2016 and the Hon'ble Supreme Court by its order dated 05.08.2016 dismissed the SLP preferred by the department. 11. We have already observed that the showcause notices issued in the case on hand under section 274 read with Section 271(1)(c) of the Act dated not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income . The show cause notice under section 271(1)(c) of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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