2015 (6) TMI 992

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.... Act' for short]. The assessee has raised as many as six grounds of appeal but the main grievance is that the penalty order is bad in law as the notice u/s 274 r.w.s. 271 does not specify the exact reason for initiation of penalty proceedings u/s 271(1)(c) of the Act. 2. At the time of hearing, learned counsel for the assessee has filed before us a copy of the notice u/s 274 read with sec.271 of the Act to demonstrate that the AO did not strike off the irrelevant portion of the said notice. He further submitted that this issue is covered in favour of the assessee by the decision of the jurisdictional High Court in the case of M/s.Manjunatha Cotton and Ginning Factory in ITA No.2564 of 2005 dated 13-12-2012 and that this Tribunal has ....

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.... 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 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 c....

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....on 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 time the order was passed and further discovery of facts subsequent to the imposition of penalty cannot validate th....