TaxTMI 
TaxTMI 
2017 (6) TMI 349
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....ppeal petition is being filed to consider the following grounds of appeal, which are independent and without prejudice to each other: 1. On the facts and circumstances of the case and in law, learned CIT(A) erred in confirming the penalty on addition of Rs. 5,66,608/-(Rs.7,35,728/-RS.1,69,1201-) levied under section 271 (1 )(c) of the act. 2. On the facts and circumstances of the case and in law, the Commissioner of Income Tax (A) erred in confirming the penalty on Rs. 23,101/- being the gifts received in India and are not gifts from the foreign country. 3. On the facts and circumstances of the case and in law, the Commissioner of Income Tax (A) erred in confirming the penalty on RS.1,21,282/- being the gifts received from relatives. 4. On the facts and circumstances of the case and in law, the Commissioner of Income Tax (A) erred in confirming the penalty on gifts of Rs. 4,10,225/- received in foreign currency and the confirmations in respect of major donors have been filed. The CIT(A) ought to have accepted the submission made and should not have levied the penalty on the same." 3. At the time of hearing, the assessee filed an additional gro....
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.... India, direct foreign currency cannot be brought into India unless it is brought through Drafts, Banker Cheque and other banking channels. The foreign gifts received in India is not a gift and therefore assessable in the hands of the assessee from undisclosed sources of income. The AO accordingly assessed to the tax these gifts of Rs. 7,35,728/- as income undisclosed sources and assessed the total income under section 144 read with section 143(3) of the Act at Rs. 8,25,130/- vide order dated 28.12.2007 and the penalty proceedings were also initiated in the said order without recording any satisfaction and simply stating that the penalty was being initiated. The quantum appeal by the assessee was also dismissed by the ld CIT(A) vide order dated 26.5.2014 as made by the AO vide order dated 28.12.2007. Thereafter the AO issued show cause notice dated 28.12.2007 u/s 274 read with section 271(1)(c) of the Act as to why the penalty should not be imposed u/s 271(1)( c) r.w.s.274 of the Act without specifying the limb on which the penalty was proposed to be levied. Ultimately , the AO imposed the penalty after rejecting the various contentions put forth by the assessee equal to 100% of th....
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.... which was incurable in view of the ratio laid down by the various decisions of the Hon'ble High Courts and the decisions of the Tribunal, the penalty proceedings initiated by the AO was void abinitio and therefore the appeal of the assessee should be allowed on legal issue by quashing the penalty proceedings and consequential order. 7. On the other hand, the ld. DR while controverting the arguments of the ld.AR defended the initiation of penalty proceedings and penalty imposed by the AO. The ld. DR submitted that u/s 274 of the Act the mandatory conditions are that the assessee should be given an opportunity to reply the show cause. No specific format has been prescribed under the Act of the said notice. Hence it was sufficient if the assessee was aware of the charges, he had to meet on an opportunity of being heard and the mistake in the notice would not invalidate the penalty proceedings. The ld.DR specifically contended that the AO has applied his mind while initiating penalty proceedings as various additions have been made after discussing the same in length with reasoning for making such additions and also clearly mentioned in the assessment order penalty proceedings will ....
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....)(c) of the Act are initiated separately without specifying or mentioning any specific charge under which the assessee is being proposed to be penalized i.e. whether the assessee has concealed a particulars of income or furnished inaccurate particulars of income. We also find from the show cause notice dated 28.12.2007 issued under section 271(1) (c) r.w.s.274 of the Act extracted hereinbelow, the AO did not mention or struck off the one of the two limbs under which the penalty was being proposed to be imposed. The show notice issued u.s 271(1)(c) of the Act is extracted below for the sake of ready reference and convenience:- "NOTICE U/S 274 R.W.S.271 OFTHE INCOME TAX ACT, 1961. Office of the Income Tax, 28(2)(3), Mumbai Date: 28.12.2007 To, Shri P K Joshua,Navi Mumbai. PAN:AAAC15902J Whereas in the course of proceedings before me for the Assessment Year 2005-06 it appears to me that you:- *have without reasonable cause failed to furnish me return of income which you were required to furnish by a notice given under section 22(1)/22(2)/34 of the Indian Income Tax Act,1922 or which you were requ....
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....In the case of Manjunath Cotton & Ginning Factory(supra), the Hon'ble Karnataka High Court has held as under : "Notice under section 274 should specifically state the grounds mentioned in section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form, where all the grounds mentioned in section 271 are mentioned, would not satisfy requirement of law. The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law. [Para 63]" In the case of CIT vs. SSA's Emerald Meadows ITA 380 of 2015, the Honble Karnatka High Court has also decided the identical issue in favour of the assessee by holding that no substantial question of law arose for determination in this appeal which was filed against the order of the tribunal wherein the tribunal allowed the appeal of the assessee by quashing the penalty proceedings and consequent order where the AO did not speci....