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TMI Blog2019 (6) TMI 1729X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Ld. CIT(A), Jalandhar, whereby the Ld. CIT(A) affirmed the levy of penalty to the tune of Rs. 6.50 crores u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter called as the 'Act'. Whereas by way of ITA No. 463/Asr/2017 the Revenue Department has challenged the order dated 10/04/2017, whereby the Ld. CIT(A) deleted the penalty to the tune of Rs. 7,14,97,376/- imposed by the AO u/s 271(1)(c) of the Act. By way of the Cross Objection i.e. C.O. No. 06/Asr/2018, the assessee also challenged the order dated 10/04/2017 passed by the Ld. CIT(A) whereby the ld. CIT(A) partly affirmed the penalty. As the issue involved in the Appeals and Cross Objection under consideration is the same and identical, therefore for the sake of brevity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. That both Learned CIT(A) Jalandhar and Assessing Officer have failed to appreciate that the maximum addition, subject to penalty , on account of contravention of provisions of Section 11(5) could be at Rs. 659863/- i.e. interest earned on Rs. 6.50 deposited with the Capital Local area Bank instead of Rs. 6.50 crore, the principal amount. This is in view of decision of Karnatka High Court in the case of CIT v. F.R. Muller Charitable Institution 363 ITR 230 (Karn), decision of Bombay High Court in the case of DIT(exemptions) v. Sheth Mafatlal Gagal Bhai Foundation Trust 249 ITR 533 (Bombay) and DIT(exemption) v. Agrim Charan Foundation 253 ITR 593 (Delhi). 6. The Learned Commissioner Of Appeal Jalandhar has failed to appreciate that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore in our considered opinion it would be appropriate to decide the legal ground first instead of going into the other grounds of appeal. 7. In the instant case, in the assessment order, the AO initiated penalty proceedings under section 271(1)(c) of the Act for 'furnishing inaccurate particulars of income' and thereafter issued the notice dated 30-12-2008 u/s 274 without specifying the limb of the penalty imposable and finally imposed penalty for furnishing inaccurate particulars of income. The Assessee by way of additional ground challenged the penalty order on the ground of defective notice. 8. Hon'ble Apex Court vide its judgment in case of M/s. SSA's Emerald Meadows, (2016) 73 taxmann.com 248(SC) dismissed the Spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified that the assessee has concealed particulars of income? 3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act') to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. .The Tribunal, while allowing the appeal of the assessee, has relied 01 the derision of the Division Bench of this Court rendered In the case of COMMISSIONER or INCOME TAX -VSMANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act in the standard proforma and the inappropriate words are not deleted, the same would postulate that the Assessing Officer was not sure as to whether he was to proceed on the basis that the assessee had concealed the particulars of income or furnished inaccurate particulars of income. According to the Hon'ble Supreme Court, in such a situation, levy of penalty suffers from non-application of mind. 6. The Revenue Department on the contrary submitted that as per sections 274/271(1)(c) of the Act , the only requirement is to give the opportunity of being heard to the Assessee, keeping in order to follow the principle of nature justice. The ld. DR relied upon the case of M/s. K.P. Madhusudan 2001(SC) and submitted that when the AO i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly goes to prove that the Assessing Officer initiated the penalty proceedings by issuing the notice u/s 274/271(1)(c) of the Act without specifying whether the assessee has concealed ''particulars of income" or assessee has furnished "inaccurate particulars of income", so as to provide adequate opportunity to the assessee to explain the show cause notice. Rather notice in this case has been issued in a stereotyped manner without applying any mind which is bad in law, hence is not a valid notice sufficient to impose penalty u/s 271(1)(c) of the Act., as held by the various Court including the Hon'ble Karnataka High Court in M/s SSA's Emerald Meadows (supra), which has been affirmed by the Apex Court by dismissing the SLP(c) and b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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