TaxTMI 
TaxTMI 
2016 (10) TMI 525
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....te from the record, briefly, are as under:- 2.1 The assessee, a company engaged in the business of producing, acquiring, marketing and distribution of music in India, filed its return of income for assessment year 2010-11 on 24/4/2011 declaring Nil income. The return was processed u/s.143(1) of the Act. A revised return declaring Nil income was filed on 26/3/2012. The case was subsequently taken up for scrutiny and the assessment was completed u/s. 143(3) of the Act vide order dated 1/8/2012, wherein an amount of Rs. 71,76,623/- was disallowed resulting in reduction of carry forward losses to this extent and in respect of which penalty proceedings under section 271(1)(c) of the Act was initiated by simultaneous issue of notice u/s. 274 r....
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....s not discernible as to why penalty is initiated, whether the penalty is initiated for furnishing of inaccurate particulars of income or for concealment of income, etc. Consequently, the penalty proceedings are wholly unsustainable in law and void ab initio, and the penalty deserves to be cancelled". 4.2 The additional ground raised (supra), challenges the validity of the notice issued u/s. 274 r.w.s. 271(1)(c) of the Act dated 8/3/2013, which is without proper indication of the exact default of the assessee for which penalty proceedings under section 271(1)(c) of the Act are initiated (copy of the notice dated 8/3/2013 has been filed on record). The Ld. Representative for the assessee also placed before us copies of the decision of the ....
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....ht to be levied. In this regard, we find that the Hon'ble High Court of Karnataka in its order in the case of M/s.Manjunatha Cotton & Ginning Factory, (2013) 359 ITR 565(Kar), relied on by the assessee, has held that such a notice, as has also been issued to the assessee in the case on hand(supra), is invalid and consequential penalty proceedings are also invalid. The relevant portion their Lordships judgment at paras 59 to 62, thereof are as under:- "59. As the provision stands, the penalty proceedings can be initiated on various ground set out therein. If the order passed by the Authority categorically records a finding regarding the existence of any said grounds mentioned therein and then penalty proceedings is initiated, in the....
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....ty 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 offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law. It is needless to point out satisfaction of the existence of the grounds mentioned in Section 271(1)(c) when it is a sine qua non for initiation or pro....
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....f income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pai reported in 292 ITR 11 at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujrat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 171 Taxman 156, has held that levy of penalty has to be clear as to the lim....