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TMI Blog2023 (11) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... iated the penalty only for furnishing inaccurate particulars of income. This action of the ld. AO cannot be upheld. Penalty should be clear as to the limb for which it is levied and the position being unclear here, the penalty is not sustainable. See Manjunatha Cotton Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] . Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord and there is no necessity of investigation of any fresh facts for the purpose of adjudication of above ground. Accordingly, by placing reliance on the judgement of Hon'ble Supreme Court in the case of NTPC Vs. CIT 229 ITR 383 (SC) we inclined to admit the additional ground for the purpose of adjudication as there was no investigation of any fresh facts otherwise on record and the action of the assessee is bonafide. 5. Facts of the issue are that the assessee is a partnership firm engaged in the business of real estate. The Assessee for the AY 2015-16 had filed its return of income u/s 139 of the Act on 14.10.2016 declaring total income of Rs. 42,39,920/- and for 2016-17 filed its return of income u/s.139 of the Act on 19/10/2016 declaring total income of Rs. 28,39,380/-. 5.1 A search and seizure operation under section 132 was conducted on 03.01.2019 in the case of Shri M. Chandrashekar Group and Others. In this connection, certain evidences pertaining to the Assessee were seized and after recording satisfaction, notice under section 153C of the Act was issued to the Assessee on 11.03.2021 requiring the Assessee to file its return of income within 7 days of service of the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has no notice. 5.7 The ld. A.R. further submitted that the Jodhpur Bench of this Tribunal in the case of Kansara Bearings Ltd vs. ACIT (2013) 35 taxmann.com 188 (Jodhpur-Trib) has held that the AO has to clearly show-cause assessee as to which of two defaults, [i.e., assessee has concealed particulars of his income or furnished inaccurate particulars of such income] have been committed by assessee and only when assessee is put to that defence penalty under section 271(1)(c) can be imposed. 5.8 He further submitted that the jurisdictional High Court of Karnataka in the case of CIT v Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Karnataka) has also held that taking up the penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law. 5.9 Given the above, he submitted that since it is clear from the notice issued by the AO under section 274 read with section 271(1)(c) of the Act that the penalty proceedings in the case of the Assessee has been initiated for 'furnishing inaccurate particulars of income'. The AO while passing the penalty order has computed the penalty for 'concealment of income' for which no notice has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment year 2016-17. 7.2 Accordingly, he issued a notice for levy of penalty u/s 274 of the Act and this fact was also recorded by ld. AO in the penalty order passed by him in para 5 in assessment year 2015-16, which is as follows: "5. Assessment u/s 143(3) r.w.s. 153C have been completed on 7.9.2021 accepting the return income filed in response to the notice u/s 153C. Since, income offered in the return of income was due to the search proceeding, a penalty notice was issued to the assessee u/s 271(1)(c) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income. Show cause notices were issued to the assessee on 7.9.2021 and 14.1.2022." 7.3 Similarly, in para 4 in assessment year 2016-17, it was recorded as follows: "4. Assessment u/s 143(3) r.w.s. 153C have been completed on 7.9.2021 accepting the return income filed in response to the notice u/s 153C. Since, income offered in the return of income was due to the search proceeding, a penalty notice was issued to the assessee u/s 271(1)(c) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income. Show cause notices were issued to the assessee on 7.9.2021 and 14.1.2022." 7.4 Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-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 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 form "here 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Ashok Pal reported in 292 ITR 11 at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujrat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case o VIRGO MARKETING reported in 171 Taxmn 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." 7.9 From the above, it is clear that the penalty should be clear as to the limb for which it is levied and the position being unclear here, the penalty is not sustainable. Therefore, considering the same, we are of the opini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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