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TMI Blog2020 (2) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided in favour of assessee. - ITA No.6469/Del./2016 - - - Dated:- 31-1-2020 - Shri Kuldip Singh, Judicial Member And Dr. B.R.R. Kumar, Accountant Member For the Assessee : None For the Revenue : Shri Saras Kumar, Sr. DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : The appellant Late Shri Jaswant Singh Madhok through L/H Shri Sandeep Singh Madhok, New Delhi (hereinafter referred to as 'the assessee ) by filing the aforesaid appeal, sought to set aside the impugned order dated 29/09/2016 passed by Ld. Commissioner of Income Tax(Appeals)-25, New Delhi qua the Assessment Year 2011-12 on the grounds inter alia that : 1. That the Id. CIT(A) has erred in sustaining the penalty of ₹ 4,21,344/- imposed u/s 271(l)(c) of the Act without appreciating the facts of the case and detailed submissions made by the appellant. 2. That the Id. CIT(A) has erred in not appreciating the facts of the case by holding that there is no double taxation. 3. That the Id. CIT(A) has erred in not adjudicating Ground Nos. 2 3 raised before him. 4. That the order imposing penalty is bad in law and void ab initio since in the show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed to specify as to whether assessee has concealed the particulars of income or has furnished inaccurate particulars of income. 8. Hon ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory-359ITR 565, CIT vs. SSA s Emerald Meadows -73 taxmann.com 241 (Kar.) (Revenue s SLP dismissed in 242 taxman 180) and Hon ble High Court of Delhi in Pr. CIT vs. Sahara India Life Insurance Company Ltd. in ITA 475/2019 order dated 02.08.2019 decided the identical issue by confirming the deletion of penalty made by the lower appellate authority on account of invalid satisfaction and invalid notice. 9. In order to proceed further, we would like to peruse the identical notice issued by AO u/s 274 read with section 271(1)(c) of the Act in both the aforesaid appeals to initiate the penalty proceedings which is extracted as under for ready perusal :- NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCOME TAX ACT, 1961. Income Tax Office, New Delhi. Dated: 30.03.2014 To, Late Sh. Jaswant Singh Madhok Through L/H Sh. Sandeep Singh Madhok A-101, Lajpat Nagar, Part-I, New Delhi Whereas in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra) 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 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty 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 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 T Ashok Poi v. CIT [2007] 292 ITR 11 /161 Taxman 340 at page 19 has held that concealment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA's Emerald Meadows (2016) 73 Taxman.com 241 (Kar) , the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of2016 by order dated 5th August, 2016. 13. Following the decisions rendered in the cases of CIT vs. Manjunatha Cotton and Ginning Factory, CIT vs. SSA s Emerald Meadows and Pr. CIT vs. Sahara India Life Insurance Company Ltd. (supra) , we are of the considered view that when the notices issued by the AO are bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, AO has moved the law into motion, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. 14. Not only this even at the time of initiating the penalty proceedings the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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