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TMI Blog2021 (12) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... ojari, AM And Shri George George K, JM Appellant by : Sri. Narendra Sharma, Advocate Respondent by : Sri. Chetan R. Addl.CIT-DR ORDER Per George George K, JM This appeal at the instance of the assessee is directed against CIT(A) s order dated 27.01.2017. The relevant assessment year is 2004-2005. 2. The assessee has raised seven grounds. All the grounds relate to imposition of penalty u/s 271(1)(c) of the I.T.Act. In the additional ground, the assessee has raised a legal issue that notice for initiation of penalty u/s 274 of the I.T.Act is defective and does not spell out the grounds on which the penalty was sought to be imposed. Therefore, it was contended that since the notice is defective, the penalty order u/s 271(1)(c) of the I.T.Act is to be held as void ab initio. 3. The additional ground raised by the assessee does not involve any investigation of facts otherwise than found on record of the department and are pure question of law. Since the additional ground raised is a pure question of law and goes to the root of jurisdiction, we admit the additional ground raised by the assessee in view of the judgment of the Hon ble Apex Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and submitted that the said notice does not specify as to whether the assessee is guilty of having furnished inaccurate particular of income or of having concealed particulars of such income . He pointed out that the show cause notice does not strike out the irrelevant portion. In this context, the learned AR relied on the judgment of the Hon ble jurisdictional High Court in the case of CIT v. Manjunatha Cotton Ginning Factory reported in (2013) 359 ITR 565 (Kar.). 8. The learned Departmental Representative relied on the Hon ble Bombay High Court judgment in the case of Ventura Textiles Limited v. CIT in ITA No.958 of 2017 (judgment dated 12th June, 2020). 9. In the rejoinder, the learned AR relied on the latest Full Bench judgment of the Hon ble Bombay High Court in the case of Mohd.Farhan A Shaikh v. DCIT reported in 431 ITR 1 (FB-Bom.). 10. We have heard rival submissions and perused the material on record. On perusal of the show cause notice issued u/s 274 of the Act (refer page 6 of the paper book filed by the assessee), it is clear that the same is defective as it does not spell out the ground on which the penalty is sought to be imposed, whether it is for con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two offences but in such cases the initiation of the penalty proceedings also must be for both the offences. But drawing up penalty proceedings for one offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law. It is needless to point out satisfaction of the existence of the grounds mentioned in Section 271(1)(c) when it is a sine qua non for initiation or proceedings, the penalty proceedings should be confined only to those grounds and the said grounds have to be specifically stated so that the assessee would have the opportunity to meet those grounds. After, he places his version and tries to substantiate his claim, if at all, penalty is to be imposed, it should be imposed only on the grounds on which he is called upon to answer. It is not open to the authority, at the time of imposing penalty to impose penalty on the grounds other than what assessee was called upon to meet. Otherwise though the initiation of penalty proceedings may be valid and legal, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 order of the Appellate Authority or 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) (B) it should be discernible from the said order which would by a legal fiction constitute concealment because of deeming provision. g) Even if these conditions do not exist in the assessment order passed, at least, a direction to initiate proceedings under Section 271(l)(c) is a sine qua non for the Assessment Officer to initiate the proceedings because of the deeming provision contained in Section 1(B). h) The said deeming provisions are not applicable to the orders passed by the Commissioner of Appeals and the Commissioner. i) The imposition of penalty is not automatic. j) Imposition of penalty even if the tax liability is admitted is not automa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 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. (emphasis supplied) 10.1 It is clear from the aforesaid judgment of the Hon ble jurisdictional High Court that on the facts of the present case that the show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. The Hon ble Karnataka High Court in the case of CIT vs. SSA s Emerald Meadows in ITA No.380 of 2015 dated 23.11.2015 by following earlier judgment in the case of CIT vs Manjunatha Cotton and Ginning factory (supra) took a view that imposing of penalty u/s 271(1)(c) of the Act is 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 whe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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