TaxTMI 
TaxTMI 
2014 (11) TMI 1005
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....tax Act, 1961[hereinafter referred to as 'the Act']. 2. Brief facts of the case are that the assessee-company filed its return of income for the relevant assessment year and thereafter also revised the same. During the assessment proceedings u/s 143(3) of the Income-tax Act, 1961[hereinafter referred to as 'the Act'], the AO observed that the assessee has changed its method of accounting from AS-7 to AS-9. After discussion with the AO, the assessee filed a revised calculation of income dated 28/12/2011 as per AS-7 due to which the assessee had arrived a total loss of Rs. 7,28,54,665/-. The AO observed that the assessee's business loss has accrued from 80-IB project from whose profits in the past, exemption u/s 80-IB ....
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....O while the learned counsel for the assessee submitted that the AO had issued the notice u/s 271(1)(c) of the Act dated 28/12/2011 and the notice is in the pro-forma without deleting the inappropriate words in the said notice which clearly shows non-application of mind by the AO as regards the default allegedly committed by the assessee for which the penalty proceedings were being initiated. Copy of the said notice is filed before us. He submitted that the Hon'ble jurisdictional High Court in the case of M/s.Manjunatha Cotton and Ginning Factory in ITA No.2564 of 2005 dated 13-12-2012 has held that the notice u/s 271(1)(c) would be invalid if inappropriate portion of the notice has not been deleted by the AO. Further, as regards merits of t....
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.... Explanation-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 where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law when the conseque....
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....nly 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 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,....