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TMI Blog2019 (8) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... sued in the case on hand under section 271(1)(c) does 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) does not strike out the inappropriate words .Imposition of penalty cannot be sustained. - Decided in favour of assessee. - ITA No.502/Bang/2014 - - - Dated:- 21-8-2019 - Shri N. V. Vasudevan, Vice President And Shri Jason P. Boaz, Accountant Member For the Assessee : Shri. H. Siva Prasad Reddy - ITP For the Revenue : Shri. R. N. Siddappaji, Addl. CIT(DR)(ITAT), Bengaluru ORDER PER JASON P. BOAZ, A.M. This appeal by the assessee is directed against the order dated 22.01.2014 of CIT(A), Hubli, relating to Assessment Year 2007-08 whereby the CIT(A) confirmed the order of the Assessing Officer (AO) dated 11.06.2010 imposing penalty of ₹ 11,38,000/- on the assessee under section 271(1)(c) of the Income Tax Act, 1961 (in short the Act ). 2. Briefly stated, the facts relevant for disposal of this appeal are as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of admission of additional grounds, we are of the view that this additional ground No.1.4 (supra) is a legal ground and can be raised by the assessee and considered by appellate authorities, even if raised for the first time. Further, we find that the admission and disposal thereof can be considered on the basis of material that is already on the records of the Department. In this view of the matter and respectfully following the decision of the Hon ble Apex Court in the case of NTPC Ltd., (1998) (229 ITR 383) (SC), we admit the additional ground, at para 1.4 of the assessee s prayer for admission (supra), for consideration and adjudication. We hold and direct accordingly. 4. Additional Ground: In support of this Additional Ground (supra) raised before the Tribunal, the learned Counsel for the assessee contended that the CIT(A) failed to follow the binding decision of Hon ble Karnataka High Court in the case of Manjunatha Cotton Ginning Factory 359 ITR 565 (Kar); and since the notice issued under section 274 r.w.s 271 of the Act dated 24.12.2009 for initiating proceedings for imposing penalty was not in accordance with law, and on this ground alone, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 of defect in notice issued under section148 of the Act wherein the AY was not mentioned and period within which the return was to be filed was not mentioned. The defect was held to be curable under section 292B of the Act. The same reasoning cannot be applied in the context of show cause notice under section 271(1)(c) of the Act. Similarly the decision of Hon'ble Supreme Court in the case of Skylight Hospitality LLP Vs. ACIT (2018) 92 taxmann.com 93(SC) was rendered in the context of Section148 of the Act wherein the name of the erstwhile company which got converted into an LLP was mentioned. The defect was held to be curable and falling within the mischief of Section292B of the Act. This decision rendered in the context of Section 148, of the Act in our view is not relevant in the present case. The same reasoning would apply to the decision of the ITAT Bangalore in the case of Jayson Infrastructure India L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Section 274 makes it clear that assessee has a right to contest such proceedings and should have full opportunity to meet the case of the Department and show that the conditions stipulated in Section 271(1)(c) do not exist as such he is not liable to pay penalty. The practice of the Department sending a printed farm where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law when the consequences of the assessee not rebutting the initial presumption is serious in nature and he had to pay penalty from 100% to 300% of the tax liability. As the 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice 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 furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 171 Taxman 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being concealment, then 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.' 9. The final conclusion of the Hon'ble Court was as follows:- 63. In the light of what is stated above, what emerges is as under: a) Penalty under Section 271(1)(c) is a ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 recorded any satisfaction or has not issued any direction to initiate penalty proceedings, in appeal. if the appellate authority records satisfaction, then the penalty proceedings have to be initiated by the appellate authority and not the Assessing Authority. p) Notice under Section 274 of the Act should specifically state the grounds mentioned in Section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. q) Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law. r) The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. s) Takin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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