AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 2006
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....are as under :- 2.1 The assessee, a public sector bank, is a subsidiary of SBI and governed by the State Bank of India (Subsidiary Banks) Act, 1959. The assessee's returns of income for the relevant assessment years 2006-07 to 2008-09 were taken up for scrutiny and the assessments were completed under Section 143(3) of the Act; wherein the total income was computed by making various additions/disallowances to the income returned. The Assessing Officer also initiated penalty proceedings under Section 271(1)(c) of the Act in the orders of assessment by issue of notices under Section 274 rws 271 of the Act for the three assessment years under consideration. 2.2 The assessee preferred appeals against the orders of assessment before the CIT (Appeals), who disposed off the appeals allowing the assessee partial relief. Both Revenue and the assessee are in appeal before the Tribunal (ITAT) against the orders of the CIT (Appeals) and those appeals are pending before this Tribunal. 2.3 Before the disposal of these appeals before the Tribunal, against the orders of assessment, the Assessing Officer who had initiated penalty proceedings in the order of assessment by issue of notices u....
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....d in the appeals for Assessment Years 2006-07 to 2008-09. Before us, the learned Authorised Representative for the assessee placed before the Bench a copy of the decision of the coordinate bench of this Tribunal in the case of M/s. Roadlinks India Pvt. Ltd. in ITA No.1485/Bang/2013 dt.27.2.2015 wherein the Tribunal, on the same issue and in similar circumstances, has admitted the additional ground and disposed off the appeal on the legal grounds so raised. The learned Authorised Representative also furnished a copy of the decision of another co-ordinate bench of this Tribunal in the case of M/s. Lion Estates and Properties in ITA No.5/Bang/2014 dt.31.7.2014 and the decision of the Hon'ble High Court of Karnataka confirming the decision of the co-ordinate bench in this case in ITA No.518 of 2014 dt.6.3.2015. The learned Authorised Representative also placed before the Bench, for our perusal the original notices issued under Section 274 rws 271 of the Act for Assessment Years 2006-07 to 2008-09 for initiating penalty under Section 271(1)(c) of the Act and placed copies of the same on record. 3.2 The learned Departmental Representative submitted that since the additional ground....
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....the Hon'ble High Court of Karnataka in the case of Sankeshwar Printers Pvt. Ltd. (supra) has held that a legal question can be raised at the stage of appeal and such a question need not be raised as a ground. The Hon'ble High Court further held that when a legal question is raised, the Tribunal has to consider the same in accordance with law and cannot refuse to entertain the same. 3.4.3 As regards the decision cited by the learned Departmental Representative CIT V Tolaram Hassomal (298 ITR 22) (MP), the co-ordinate bench of this Tribunal in the case of Smt. K.R. Prabhavati in M.P. No.5/Bang/2014 (in ITA No.234/Bang/2011) had occasion to examine the said decision. The co-ordinate bench in its order dt.10.4.2015 observed that the cited decision is not the decision of the jurisdictional High Court by the Hon'ble High Court of Karnataka and is also contrary to the law laid down by the Hon'ble Apex Court in the case of NTPC Ltd. in 229 ITR 383 (SC). The relevant portion of the order of the co-ordinate bench at para 10 thereof reads as under :- " 10. As far as the decision of the Hon'ble Madhya Pradesh High Court in Tolaram Hassomal (supra) is concerned, it is ....
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....ed breaker in the case of dispension of justice. Similar view has been taken by the Hon'ble High Court of Madhya Pradesh in the case of Bhopal Sugar Mills Limited; 233 ITR 429 wherein it was held that there is no prohibition on the power of the Tribunal to entertain an additional ground which according to the Tribunal arises in the matter and for just decision of the case. In view of the above discussion and decision of the Hon'ble Supreme Court in the case of National Thermal Power (supra) and the latest decision of the Hon'ble jurisdictional High Court in the case of Turquise Investment & Finance Limited (supra), which was after the date of decision cited by the learned CIT DR in the case of Tolaram Hassomal (supra), we 13 are inclined to follow the latest decision of the Hon'ble jurisdictional High Court decided after considering the decision of Hon'ble Supreme Court reported at 267 ITR 654. As all the facts relating the additional legal grounds taken before us are already on record, we are inclined to entertain the additional grounds which are purely legal in nature and accordingly proceed to decide the same." From the above discussion, it is clear that when a legal question....
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....otice) of the printed form of notice under section 274 of the Act deals with two satisfactions; i.e. concealment of particulars of income or furnishing of inaccurate particulars of income. The Hon'ble Court has held that both these conditions are distinct and different, though at times they may overlap with each other. It was held by their Lordships that the Assessing Officer while issuing notice under section 274 r.w.s. 271 of the Act has to come to the conclusion as to whether it is a case of concealment of income or whether it is a case of furnishing of inaccurate particulars of income and if the standard proforma of the notice is issued without deleting the relevant clauses, it leads to an inference of non-application of mind by the Assessing Officer. The relevant portion of the Hon'ble Court's order at paras 59 to 91 at pages 93 to 98 are extracted hereunder :- "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, i....
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....ould 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 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 proce....
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....alid. Further, it cannot be that the Assessing Officer intended to initiate penalty proceedings for both concealment of particulars of income and furnishing of inaccurate particulars of income as the word used in the notice is "OR" and not "and". In this view of the matter, the defect in issuing the notice under section 274 r.w.s. 271 of the Act dt.31.12.2009 cannot be considered, a curable defect or procedural irregularity as contended by the learned Departmental Representative. 4.3.4 In view of our holding that the notice under section 274 r.w.s. 271 of the Act dt.31.12.2009, issued in the case on hand is invalid, we cancel the impugned orders of the learned CIT (Appeals) and quash the order of Assessing Officer dt.30.6.2010 levying penalty under section 271(1)(c) of the Act for Assessment Year 2007-08. In view of this, we do not see any reason to adjudicate on the other arguments put forth regarding the merits of the impugned penalty. Since the legal issue raised has been decided in favour of the assessee, adjudication on the other issues raised would only be an academic exercise." 3.5.3 In the case on hand before us, the factual matrix is exactly similar. The Assessing Of....