TaxTMI 
TaxTMI 
2016 (11) TMI 1030
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....ssee u/s. 132(4) and included in the return filed u/s. 153A of the Act. The penalty so levied is unjustified and need to be deleted." 3. Subsequently, the assessee has raised following additional ground of appeal for both the assessment years under consideration:- "1) That the Ld. AO erred in not mentioning the limb sec 271(1)( c) that has been violated by the assessee, in the notice issued u/s. 274 r.w.s 271 of the Income Tax Act 1961. Further, the Ld. AO has not recorded any satisfaction as to whether the assessee has concealed his income or has furnished inaccurate particulars of his income in the penalty notice issued u/s. 274/271 of the Income Tax Act 1961. Hence, the penalty proceeding is bad in law and the same is liable to be quashed. " 3.1 After hearing both the parties and perusing the material available on record, we admit the additional ground as raised by the assessee since the issue involved therein is a legal issue and all the facts necessary for adjudication thereof are already on record. 4. Brief facts of the case are that a search and seizure operation was conducted u/s. 132 of the Act in the Aroma Group of cases on 27-02-2009. The assessee filed....
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....f silver utensils and articles weighing approximately 46.381 kg and valued by the departmental valuer at Rs. 10,66,763/- was made. Out of the silver utensils and articles inventoried as stated above, silver utensils and articles of gross weight 30.00 kg and valued at Rs. 6,90,000/- were owned up by the assessee and the same have been considered as application of funds out of his income disclosed u/s 132(4). The remaining silver utensils and articles weighing 16.381 kg have been found to form part of the silver utensils and articles disclosed by various members of the assessee's family as per their Wealth Tax returns. During the course of search and seizure operations conducted at the residential premises of the assessee, an inventory of 5 nos. of KVPs of Rs. 50,000/- was made. The said KVPs have been found to belong to the assessee and the same have been considered as application of funds out of his income disclosed u/s 132(4) for the AY 2004-05. During the course of search and seizure operations conducted at the residential premises of the assessee, an inventory of one FD of Rs. 1,01,649/- was made. The said FD has been found to belong to the assessee and the....
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.... cover up and take care of the omissions/mistakes in the seized documents. That means the additional undisclosed income was admitted based on seized documents and previous year relevant to A.yrs. 2006-07 and 2007-08 had expired before the date of search. Further, the appellant had not declared such additional undisclosed income in the returns of income furnished for those assessment years before the date of search. In view of the specific provisions of Explanation 5A of section 271(1)( c) and on facts of the instant cases it is held that penalty u/s. 271(1) ( c) has rightly levied by the AO in these cases. Therefore, levy of penalty of Rs. 23,56,670/- for A.Y 2006-07 and Rs. 25,13,837/- for A.Y 2007-08 in these cases is confirmed." 8. Aggrieved, the assessee is in appeal before us by raising the additional ground of appeal as above. 9. During the course of hearing before us the Ld. Counsel for the assessee submitted and prayed to decide the preliminary issue being additional ground as raised by the assessee before us. The ld. Counsel also submitted that the AO has not recorded any satisfaction as to whether the assessee has concealed his income or has furnished inacc....
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....o be levied on the for "furnishing inaccurate particulars of income " or concealing particulars of such income". On this aspect we find that in the show cause notice u/s. 274 of the Act the AO has not struck out the irrelevant part. It is therefore not spell out as to whether the penalty proceedings are sought to be levied for "furnishing inaccurate particulars of income "or "concealing particulars of such income". The Hon'ble Karnataka High Court in the case of CIT & Anr. v. Manjunatha Cotton and Ginning Factory, 359 ITR 565 (Karn), has held that notice u/s. 274 of the Act should specifically state as to whether penalty is being proposed to be imposed 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 a....
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....ng 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 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 initiate....
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....on 271(1)(c) is a sine qua non for initiation of penalty proceedings under Section 271. e) The existence of such conditions should be discernible from the Assessment Order or order of the Appellate Authority or Revisional Authority. f) Even if there is no specific finding regarding the existence of the conditions mentioned in Section 271(1)(c), at least the facts set out in Explanation 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 a....