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TMI Blog2020 (6) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... al income of the assessee by disallowing its claim for long-term capital gain arising from the sale of shares of Jackson Investment Limited by treating the same as bogus. Penalty proceedings under section 271(1)(c) were also initiated by the Assessing Officer and since the explanation offered by the assessee in response to the showcause notices issued during the course of the said proceedings was not found acceptable by him, the Assessing Officer imposed the penalty of Rs. 2,79,630/- under section 271(1)(c) of the Act. 3. On appeal, the ld. CIT(Appeals) confirmed the said penalty imposed by the Assessing Officer vide his appellate order dated 14.01.2020 passed ex-parte. Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal. 4. We have heard the arguments of both the sides and also perused the relevant material available on record. At the time of hearing before us, the ld. Counsel for the assessee has raised a new preliminary issue challenging the very initiation of the penalty proceedings by the authorities below under section 271(1)(c) on the ground that in the absence of any specific mention in the show-cause notice issued un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that initiating penalty proceedings on one limb and find the assessee guilty in another limb is bad in law. It was submitted that in the present case, the aforesaid decision will squarely apply and all the orders imposing penalty have to be held as bad in law and liable to be quashed. 8.2 The Hon'ble Karnataka High Court 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 u/s.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 thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the tax liability is admitted is not automatic. k) Even if the assessee has not challenged 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 bona fide, an order imposing penalty could be passed. m) If the explanation offered, even though not substantiated by the assessee, but is found to be bona fide 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Tribunal rendered in the case of Suvaprasanna Bhattacharya -vs.- ACIT rendered vide its order dated 06.11.2015 in ITA No. 1303/KOL/2010 by relying on the decision of the Hon'ble Karnataka High Court in the case of CIT & Another -vs.- Manjunatha Cotton & Ginning Factory reported in 359 ITR 565 is squarely applicable in the present case. It is also noted that a similar view has been taken by the Hon'ble Calcutta High Court in the case of Principal CIT -vs.- Bijoy Kr. Agarwal (ITAT No. 272 of 2017 dated 02.04.2019), wherein the decision of the Tribunal cancelling the penalty imposed under section 271(1)(c) was upheld by the Hon'ble Jurisdictional High Court holding that the notice issued under section 271(1)(c) without specifying which of the two contraventions, the assessee is guilty of was defective and the penalty imposed in pursuance of such defective notice was not sustainable. To arrive at this conclusion, Hon'ble Calcutta High Court relied on the decision of Amrit Foods -vs.- Commissioner of Central Excise UP reported in (2005) 13 SCC 419 as well as their own decision in the case of Principal CIT -vs. Dr. Murari Mohan Koley (ITAT No. 306 of 2017 dated 18.07.2018). The issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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