TaxTMI 
TaxTMI 
2016 (5) TMI 1023
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....assessee states that the notice issued initiating the penalty proceedings suffer from incurable defect. In support of this, assessee has filed a copy of the notice dt. 30.03.2013, issued u/s.274 r.w.s.271 of the Act. 03. Per contra, Ld. DR submitted that the levy of penalty for the impugned assessment year was for concealment of income. Ld. DR submitted that assessee had failed to disclose the correct income. There was clear concealment of income. According to him, vagueness of notice could not be considered as a reason for annulling the levy of penalty, when the assessment order was clear for what reason the penalty proceedings were being initiated. 04. We have perused the orders and heard the contentions. It is necessary to reproduc....
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....the notice issued u/s 271(1)(c) of the IT Act, it is dated 29-03-2002 addressed to the assessee for the assessment year 1998-99. It is in the prescribed form with the blanks to be filled up by the relevant information. At the bottom of the notice on page-2, it is mentioned that inappropriate words and paragraphs are to be deleted. However, we find that the AO except from the assessment year and striking off para 2 of the notice has not filled up any other blanks nor has he struck off any other inappropriate words or paragraphs. Para-4 mention both the concealment of particulars of income as well as furnishing of inaccurate particulars of such income. The AO has not specified as to which of the conditions for initiating penalty is fulfilled.....
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....ined in Explanation 1 or in Explanation(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 insec.271 should be made known about the grounds on which they intend imposing penalty on him as the sec.274 makes ft c/ear 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 sec.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 as the ground mentioned in sec.271 are mentioned would not satisfy requirement of law when the consequence of the as....
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....unds 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 the penalty must be determined with the reference to information, facts and ....
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....application of mind' 17. We find that in the case before us also, the AO has not specified the relevant portion of the clause (c) for initiating penalty proceedings u/s 271(1)(c) of the IT Act and therefore, as held by the Hon'ble High Court, the assessee could not have rebutted the initial presumptions for initiation of penalty which is serious in nature. Respectfully following the decision of the Hon'ble jurisdictional High Court in the case of M/s Manjunatha Cotton & Ginning Factory (cited supra) we hold that the notice u/s 274 r.w.s.271(1)(c) is invalid. The contention of the learned DR that it is only a defect which is curable u/s 292B of the IT Act, is also not acceptable because the AO gets the jurisdiction to levy the penalty onl....