AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (3) TMI 1330
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....ar 2007-08 on 31.10.2007 declaring income Rs. 1,75,14,480/-. Thereafter, the assessee filed revised return of income on 31.03.2009 declaring loss of Rs. 89,73,850/-. The case of the assessee was selected for scrutiny. During course of scrutiny assessment, the Assessing Officer made additions on following grounds: Sr. No Head of addition Amount 01 Interest pertain to prior periods prior to 31.03.2006 received during he year 2,65,68,325/- 02 Increase in statutory Reserve fund treated as income u/s 28 37,37,184/- 03 Deduction claimed on account of investment fluctuation fund 2,95,641/- 04 Provision for standard assets. 4,44,500/- 05 Amortization on premium on Govt. securities (HTM) 6,12,119/- Total 3,16,27,769/- Penalty proceedings were initiated in respect of additions made during assessment. The Assessing Officer vide order dated 28.03.2013 levied penalty of Rs. 96,75,037/- u/s 271 (1) (c ) of the Act. For the assessment year 2008-09, the assessee filed return of income on 30.09.2008 declaring total income of Rs. 75,85,490/-. The Assessing Officer in scrutiny assessment made additions on following counts: Sr.No Head of addition Amount 01 In....
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....s 271 (1) (c) of the Act are initiated for furnishing inaccurate particulars of income. Thereafter, while issuing notice u/s 274 r.w.s 271 (1) ( c ) of the Act, the Assessing Officer has not struck off irrelevant limb of charge for levy of penalty. Thus, the notice is ambiguous as far as the charge for levying penalty is concerned. At the time of passing order u/s 271 (1) (c) of the Act, the Assessing Officer in concluding paragraph of the order has observed that assessee has furnished inaccurate particulars of its income and has concealed it's income. The observations of the Assessing Officer while recording satisfaction for initiating penalty proceedings and while levying penalty are inconsistent. The ld. AR further submitted that while passing assessment order for assessment year 2008-09, the Assessing Officer at the time of making each and every addition has recorded satisfaction for levy of penalty u/s 271 (1) ( c) of the Act by observing that, penalty proceedings u/s 271 (1) (c) of the Act are initiated for furnishing inaccurate particulars or concealment of its income. These remarks itself show that the Assessing Officer is not sure as to whether the penalty is to be levied....
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....ceedings and the subsequent orders levying penalty u/s 271 (1) (c ) of the Act. The ld. DR submitted that a perusal of the assessment order for the assessment year 2007-08 would show that Assessing Officer has recorded satisfaction for initiating penalty proceeding for furnishing inaccurate particulars of income. Thus, Assessing Officer has specified the charge for initiating penalty proceeding. Thereafter, while passing order levying penalty u/s 271 (1) ( c) of the Act, the Assessing Officer has observed that assessee has furnished inaccurate particulars of income. Concealment of income is corollary to furnishing of inaccurate particulars of income. Thus, there is no ambiguity in recording satisfaction and levying penalty. The ld. DR prayed for dismissing the appeals of the assessee. 6. Both sides heard. Orders of the authorities below have been perused. The assessee has primarily assailed levy of penalty on the ground that the charge mentioned while recording satisfaction at the time of passing of the assessment orders and at the time of passing of the penalty order are inconsistent. Further, Ld. AR of the assessee has pointed that notice issued for levy of penalty u/s 274 r.w.s....
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....ssion on the part of the Revenue is in the face of the decision of the Supreme Court in Ashok Pai V/s. CIT 292 ITR 11 [ relied upon in Manjunath Cotton & Ginning Factory( supra)- wherein it is observed that concealment of income and furnishing of inaccurate particulars of income in Section 271 (1) (c ) of the Act, carry different meanings/ connotations. Therefore, the satisfaction of the Assessing Officer with regard to only one of the two breaches mentioned under section 271 (1) (c ) of the Act, for initiation of penalty proceedings will not warrant/ permit penalty being imposed for the other breach. This is more so, as an Assessee would respond to the ground on which the penalty has been initiated/ notice issued. It must, therefore, follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the Assessee has no notice. 7. Therefore, the issue herein stands concluded in favour of the Respondent-Assessee by the decision of the Karnataka High Court in the case of Manjunath Cotton & Ginning Factory ( supra). Nothing has been shown to us in the present facts which would warr....
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....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 the 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 the 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 the principles of natural justice and cannot be sustained. Thus, once the proceedings are initiated on one ground, the ....