TaxTMI 
TaxTMI 
2016 (12) TMI 1012
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....was covered under a search action carried out by the Department under section 132(1) of the Act. The assessee was also covered under such search action and as a consequence for assessment year 2005-06 a notice under section 153A of the Act dated 17/1/2012 was issued and in response assessee filed a return of income on 01/03/2012 declaring a total income of Rs. 1,60,26,130/-, whereas in the original return of income filed under section 139(1) of the Act on 29/7/2005, the total income declared was Rs. 1,59,22,176/-. The difference in the total income as per the original return of income and the return of income filed in response to notice under section153A of the Act was on account of interest income of Rs. 1,15,951/-, which was not offered to tax in the original return of income. The ensuing assessment under section 143(3) r.w.s 153A was finalized on 28/3/2013, whereby the returned income was accepted at Rs. 1,60,26,130/-. Subsequently, the Assessing Officer passed an order dated 26/09/2013 holding the assessee guilty of default under section 271(1)(c) of the Act and imposed a penalty of Rs. 39,029/- being 100% of tax sought to be evaded on the income of Rs. 1,15,951/-. The said lev....
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....1)(c) of the Act. 3.1 Notwithstanding the plea regarding the absence of merit for levy of penalty, the Ld. Representative for the assessee raised a preliminary objection that the penalty proceedings were initiated by the Assessing Officer for concealment of particulars of income, whereas the penalty has been imposed by the Assessing Officer for furnishing inaccurate particular of income. The point made out by the assessee is that since the charge for which the penalty proceedings have been initiated is different from the basis on which it has been levied, the penalty order passed by the Assessing Officer is unsustainable and in this regard relied on the judgment of the Hon'ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton and Ginning Factory, 359 ITR 565(Kar). It has also pointed out that the said decision has also been applied by the Mumbai Tribunal in the case of Dharni Developers v. ACIT,40 ITR (Trib) 720(Mumbai), wherein penalty was set-aside on the ground that initiation was for one default, whereas the imposition of penalty was for another default. 4. On the other hand, Ld. Departmental Representative defended the action of the lower authorities levying the ....
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...., qua the income in question. In this context, we notice that in the assessment order the Assessing Officer noted as under:- "The difference in the total income as per original return of income and return of income filed in response to notice under section 153A of the Act was explained to be on account of interest income of Rs. 1,15,951/-, which was not offered to tax in the original return of income. Penalty proceedings u/s.271(1)(c) of the Act are initiated separately for concealment of particulars of income in the return of income filed u/s.139(1) of the Act." Whereas in the penalty order the Assessing Officer concludes the imposition of penalty in the following words:- "Therefore, I am of the opinion that the assessee has furnished inaccurate particulars of income within the meaning of sec.271(1)(c) of I.T. Act for the year under consideration within the meaning of explanation to the said section and has thereby rendered himself liable for penalty u/s.271(1)(c) of I.T. Act therefore, I am satisfied that this is a fit case for levy of penalty u/s.271(1)(c) of the I.T.Act, 1961." 5.2 Thus factually speaking, it is quite clear that the observations made by the Assessing Office....
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....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 the order of penalty which, when passed, was not sustainable. 61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of 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(SC) 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 Engineerin....