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TMI Blog2020 (10) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... y proceedings on the basis of allegation in the penalty notice only and not on the basis of allegation in the Assessment Order and therefore, even if specific allegation is made by the AO in the Assessment Order, the defect in the penalty notice does not get rectified even under section 292B Rectification of mistake - HELD THAT:- In the present case, this is not the case of the Revenue that any judgment of Hon ble jurisdictional High Court was not considered by the Tribunal in the present case. In fact, this is admitted position that the Tribunal order is following the binding judgment of Hon ble Karnataka High Court rendered in the case of CIT Vs. Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT ] and therefore, in the facts of the present case, this judgment of Hon ble Gujarat High Court is also not rendering any help to the Revenue. We find that there is no apparent mistake in the impugned Tribunal order. - Decided in favour of assessee. - Shri N. V. Vasudevan, Vice President And Shri A. K. Garodia, Accountant Member For the Applicant : Shri. V. Srinivasan, Advocate For the Revenue : Shri. Priyadarshi Mishra, JCIT (DR)(ITAT), Bengaluru ORDER PER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cealment of income or of furnishing inaccurate particulars of income, the Tribunal order cited by Id. AR of assessee rendered in the case of Sri A Nagaraju Vs. ITO(supra) and in turn the judgement of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Manjunatha Cotton and Ginning factory (supra) is squarely applicable and respectfully following these judgements, we hold that in the present case also, ,penalty order passed by AO is invalid and as a consequence, the penalty by AO stands deleted. 5. From the above para reproduced from the impugned Tribunal order, it is seen that the Tribunal has decided the issue by following the binding judgment of Hon ble jurisdictional High Court rendered in the case of CIT Vs. Manjunatha Cotton and Ginning factory (supra). In para 3 of the Tribunal order, this fact is also noted by the Tribunal that the notice issued by the AO under section 274 r.w.s. 271 of the Act is available on page 8A of the Paper Book and from the same, it can be seen that the AO has not made it clear as to whether the assessee is guilty of concealment of income or of furnishing inaccurate particulars of income. In the present MP, this is not the claim of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption of income u/s. 80IA of the Act, on the pretext that the assessee is an eligible undertaking within the meaning of Section 80IA. However, it is only during the course of a survey when a statement of the Director of the company was recorded, it came to light that the assessee was not entitled for the benefit of Section 80IA of the Act. Even otherwise, the assessee has not furnished the details of any infrastructure project constructed or maintained by it during the year .under consideration. Thus it is clear that the assessee has deliberately furnished the inaccurate particulars of income and thereby sought to avail the beneficial provisions of Section 80IA. The assessee was aware that it was not entitled and therefore this fact was accepted by the assessee during the course of survey. In view thereof, when the assessee' has furnished' inaccurate particulars of income in the return of income and claimed the benefit u/s. 801A and has filed nil return of income, the case of the assessee clearly falls within the Purview of Section 271(1)(C) of the Act. Even otherwise, in our view, once the assessment order clearly mentioned that the assessee has furnished inaccurate pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Tribunal in that case. At this juncture, we feel it proper to reproduce the conclusion of Hon ble Karnataka High Court in the judgment rendered in the case of CIT Vs. Manjunatha Cotton and Ginning factory (supra) and the same is reproduced hereinbelow from pages 31 to 33 of the said judgment available on pages 37 to 39 of the Paper Book filed by the Revenue:- Conclusion In the light of what is stated above, what emerges is as under : (a) Penalty under section 271(1)(c) is a civil liability. (b)Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. (c) Willful concealment is not an essential ingredient for attracting civil liability. (d) Existence of conditions stipulated in section 271(1)(c) is a sine qua non for initiation of penalty proceedings under section 271. (e) The existence of such conditions should be discernible from the assessment order or the order of the appellate authority or the revisional authority. (f) Even if there is no specific finding regarding the existence of the conditions mentioned in section 271(1)(c), at least the facts set out in Explanation 1(A) and 1(B) it should be discernible from the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the requirement of law. (r) The assessee should know the grounds which he has to meet specifically. Otherwise, the principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. (s) Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law. (t) The penalty proceedings are distinct from the assessment proceedings. The proceedings for imposition of penalty though emanate from proceedings of assessment, it is independent and separate aspect of the proceedings. (u) The findings recorded in the assessment proceedings in so far as concealment of income and furnishing of incorrect particulars would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on the merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings. In the light of what we have stated above, it is clear that merely because the assessee agreed for addition and accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the finding of Hon ble Karnataka High Court that if the AO has not made a specific allegation in the Assessment Order, then only, making of specific allegation in the notice issued under section 274 r.w.s. 271 of the Act is necessary or relevant. Hence, in our considered opinion, once the notice issued by the AO under section 274 r.w.s. 271 of the Act is found to be defective because there is no specific allegation made by the AO regarding this aspect as to whether the assessee is guilty of concealment of income or guilty of furnishing inaccurate particulars of income, the said notice cannot be accepted as valid even if such specific allegation is made by the AO in the Assessment Order. In our considered opinion, the AO has to make a specific allegation in the Assessment Order also and that will satisfy this requirement that the AO was satisfied about reason of initiating penalty proceedings but even after that, the allegation should be specific and clear in the penalty notice also because the assessee has to submit reply in the course of penalty proceedings on the basis of allegation in the penalty notice only and not on the basis of allegation in the Assessment Order and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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