TaxTMI 
TaxTMI 
2016 (2) TMI 118
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....s liable to be cancelled. 2. On the facts the learned Commissioner (A) ought to have appreciated that the assessing authority having failed to comply with the provisions of Sec.271(1)(c) of the Act with regard to the initiation of penalty proceedings, the proceedings were vitiated and consequently the penalty order passed was invalid and accordingly liable to be cancelled. 3. The learned Commissioner (A) having failed to record the satisfaction as required under the provisions, the penalty proceedings were invalid and no penalty u/s.271(l)(c) of the Act was exigible and thus the impugned penalty is liable to be cancelled. 4. The learned Commissioner (A) ought to have appreciated that the explanation of the appellant had not been considered by the assessing authority and consequently the penalty levied was opposed to law and liable to be cancelled. 5. The learned Commissioner (A) ought to have appreciated that the additional income offered was to buy peace and did not represent the income earned by the appellant in the relevant year and accordingly the penalty as levied is opposed to law and consequ'nt1y liable to be deleted. 6. The l....
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.... for all these four assessment years issued by the AO dated 28/12/2010 and submitted that the AO has not specified the grounds mentioned in sec. 271(1)(c) whether it is for concealment of income or furnishing inaccurate particulars of income. Therefore, the show cause notice issued u/s 274 is a defective notice and in view of the judgment of the Hon'ble jurisdictional High Court in case of Manjunatha Cotton & Ginning Factory (359 ITR 565) the penalty levied u/s 271(1)(c) deserves to be deleted. Learned AR of the assessee has also relied upon the decision dated 3/7/2015 of the co-ordinate bench of this Tribunal in case of Shri H.Lakshminarayana vs. ITO in ITA No.992 to 996/Bang/2014 as well as in the case of M/s. Maganur Builders vs. ITO dated 11/6/2015 in ITA No.537/Bang/2010 and submitted that the coordinate benches of this Tribunal by following the judgment of the Hon'ble jurisdictional High Court in case of Manjunatha Cotton & Ginning Factory (supra), have held that the defect in the show cause notice u/s 274 cannot be said to be curable u/s 292BB of the Act. Thus, learned AR of the assessee has submitted that the penalty levied u/s 271(1)(c) would not survive in the cas....
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.... assessee, the Hon'ble High Court has held that in the absence of specifying that which condition is satisfied and the assessee is accused of the condition as mentioned in sec. 271, the assessee has not been given the proper opportunity to meet those grounds. The penalty is to be imposed only on the ground that he is called upon to answer. Thus, it is not open to the authority at the time of imposing the penalty to impose penalty on a ground other than what the assessee was called upon to meet. Thus, by analysing the requirement of the provision, the Hon'ble High Court has held that the standard proforma without striking out the relevant clauses in the show cause notice will lead to inference of nonapplication of mind. We note that the Tribunal in the series of decisions has followed the judgment of the Hon'ble jurisdictional High Court rendered in case of Manjunatha Cotton & Ginning Factory (supra) and in the case of H.Lakshminarayan (supra) an identical issue was considered and decided by the co-ordinate bench of this Tribunal in para.7 to 16 as under: "7. We have heard the submissions of the ld. counsel for the assessee and the ld. DR. A technical objection ....
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....ed for concealment of particulars of income or for furnishing inaccurate particulars of income. The Hon'ble High court has further laid down that certain printed form where all the grounds given in section 271 are given would not satisfy the requirement of law. The Court has also held that initiating penalty proceedings on one limb and find the assessee guilty in another limb is bad in law. It was submitted that in the present case, the aforesaid decision will squarely apply and all the orders imposing penalty have to be held as bad in law and liable to be quashed. 13. The ld. DR relied on the order of the CIT(Appeals) wherein the CIT(A) has expressed his opinion that the assessee was fully aware of the charge against him and he cannot take shelter on technical grounds. 14. We have heard the rival submissions. The Hon'ble Karnataka High Court in the case of CIT & Anr. v. Manjunatha Cotton and Ginning Factory (supra) has laid down the following principles to be followed in the matter of imposing penalty u/s.271(1)(c) of the Act. "NOTICE UNDER SECTION 274 59. As the provision stands, the penalty proceedings can be initiated on various groun....
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....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 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....
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....planation 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 automatic. k) Even if the assessee has not challenged the order of assessment levying tax and interest and has paid tax and interest that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment order that, it is on account of such unearthing or enquiry concluded by authorities it has resulted in payment of such tax or such tax liability came to be admitted and if not it would have esc....