TaxTMI 
TaxTMI 
2016 (4) TMI 950
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....und submitted that the said ground is purely a legal ground and no fresh facts are required to be investigated. Relying on the decisions of Hon'ble Supreme Court in the case of NTPC Ltd. reported in 229 ITR 383 and in the case of Jute Corporation of India Ltd. reported in 187 ITR 688 and the decision of Hon'ble Bombay High Court in the case of Ahmedabad Electricity Company reported in 199 ITR 351 he submitted that the additional ground raised by the assessee should be admitted. 5. After hearing both the sides and considering the additional ground raised by the assessee being purely legal in nature, the additional ground raised by the assessee is admitted for adjudication. 6. Facts of the case, in brief, are that the assessee is engaged in the activities of Builders and Promoters. A search and seizure action u/s.132 of the Act was conducted in the cases of Ladkat group. During the said search page No.8 of Bundle No.16 was seized at M/s. New Auto Corner, Plot No.36, Somwarpeth, Pune which is a page in pencil writing by Shri Gautam Ladkat. It was observed that on the top of this page there is a noting "SLK Investment uptill now" and below that columns are made as "CHS" and "CQ" colu....
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....f the I.T. Act for concealment of income as discussed in the body of order. Referring to the notice issued u/s.274 r.w.s. 271(1)(c) vide letter dated 22-03-2012 he submitted that here also there is no mention as to whether the penalty has been levied for concealment of income or for furnishing of inaccurate particulars of income. 13. Referring to the decision of the Pune Bench of the Tribunal in the case of Sanjog Tarachand Lodha Vs. ITO vide ITA Nos. 688 and 689/PN/2014 order dated 31-08-2015 for A.Yrs. 2007-08 and 2008-09 he submitted that the Tribunal, following the decision of Hon'ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton & Ginning Factory reported in 359 ITR 565, has held that where it is not clear from the notice u/s.274 the reasons for levying penalty the notice itself is bad in law and the penalty order passed on the basis of such notice is not sustainable. Since in the instant case admittedly it is not clear from the notice issued u/s.274 regarding the reasons for levy of penalty, therefore, the notice itself has to be held as bad in law and invalid and consequently the penalty order passed on the basis of such invalid notice is not sustainable. 1....
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....s concerned for treating the notice u/s.274 as bad in law for not clearly mentioning the reasons for levy of penalty he submitted that the decision of Hon'ble Supreme Court in the case of Mak Data Pvt. Ltd. Vs. CIT reported in 358 ITR 593 is applicable. Referring to para 10 of the order he submitted that the Hon'ble Supreme Court in the said decision has held that the AO has to satisfy whether the penalty proceedings be initiated or not during the course of assessment proceedings and the AO is not required to record his satisfaction in a particular manner or reduce it into writing. The Hon'ble Supreme Court while deciding the issue has followed the decision of Hon'ble Supreme Court in the case of Union of India Vs. Dharmendra Textile Processors reported in 13 SCC 369 and CIT Vs. Atul Mohan Bindal reported in 9 SCC 589. He accordingly submitted that the additional ground raised by the assessee should be dismissed. 17.1 The Ld. Counsel for the assessee in his rejoinder submitted that the decision in the case of Mak Data (P) Ltd. (Supra) is distinguishable and not applicable to the facts of the present case. He submitted that since the Coordinate Bench of the Tribunal has already con....
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....Hon'ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (Supra) which has been followed by the Coordinate Bench of the Tribunal in the case of Sanjog Tarachand Lodha (Supra) such penalty notice is bad in law where it is not clear from the notice u/s.274 about the reasons for levying penalty. According to him, the penalty order passed on the basis of such invalid notice is not sustainable. 20. We find merit in the above submission of the Ld. Counsel for the assessee. Admittedly, the AO in the body of the assessment order at para 10 has initiated penalty proceedings for concealment of particulars of income and furnishing inaccurate particulars of income by the assessee. At the end of the assessment order the AO mentions issue notice u/s.274 r.w.s.271(1)(c) for concealment of income as discussed in the body of the order. The relevant para 10 and last part of the assessment order read as under : "10. The penalty proceedings u/s.271(1)(c) of the I.T. Act, 1961 for concealing the particulars of income and furnishing inaccurate particulars of such income are separately initiated." . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....
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.... for levy of penalty u/s. 271(1)(c) shall be deemed to be invalid. In support of these submissions, reliance has been placed on the decision of Hon'ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton & Ginning Factory reported as 359 ITR 565 (Karan). 6. A perusal of the order passed u/s. 271(1)(c) dated 28-06- 2012 levying penalty shows, that in para 2 the Assessing Officer has specifically mentioned that penal proceedings u/s. 271(1)(c) are initiated for concealing the income. The relevant extract of para 2 of the order levying penalty reads as under: "2. ..........Since assessee had originally concealed income to the extent of Rs. 7,92,190/-, penalty proceedings u/s. 271(1)(c) of the Act was initiated on finalization of assessment proceedings." In both the impugned assessment years, the order levying penalty are similarly worded. 7. In the concluding paragraph of the order, the Assessing Officer has observed that the penalty is levied for furnishing of inaccurate particulars of income and concealing income. The relevant extract of para 7 of the order reads as under: "7. I am satisfied that the assessee has without any reasonable cause, furnished an ina....
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.... 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 construed, notice issued under Section 274 should satisfy the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended if the show cause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee. 60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two offences but in such cases the initiation of the penalty proceedings also must be for both the offences. But drawing up penalty proceedings for one off....
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....lhi High Court in the case of VIRGO MARKETING reported in 171 Taxmn 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind." 9. Thus, in the facts of the case and documents on record, we are of the considered view that the notice issued u/s. 271(1)(c) r.w.s. 274 is invalid and thus, the subsequent penalty proceedings arising there from are vitiated. The impugned orders are set aside and the appeals of the assessee are allowed." 23. So far as reliance on the decision of Mak Data Pvt. Ltd. by the Ld. Departmental Representative is concerned the same in our opinion is not applicable to the facts of the present case. The decision in the case of Mak Data Pvt. Ltd. has to be understood in the context of the facts of the said case. Therefore, before relying on a particular ....