TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 1123
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....notices u/s 153A were issued calling for returns of income for six immediately preceding assessment years to the assessment year in which search took place. In response to notices, the assessees have filed their returns of income on 19-05-2008. The assessments were completed u/s 143(3) r.w.s. 153A on 30-12-2008. The ITAT, J-Bench, vide its order dated 27-10-2010 had set aside the matter to the file of the AO with certain observations. Consequent to ITAT order, the AO has taken up the assessments and accordingly issued notice u/s 143(2) dated 13-12-2010. In response to notices, the authorized representative of the assessees appeared and furnished the details and explanations called for, from time to time. The AO, after considering the explanations of the assessee completed the assessments u/s 143(3) r.w.s. 153A of the Act on 16-12-2011 by making certain addition towards unexplained money, bogus long term capital gain and bogus agricultural income. The assessee carried the matter in appeals before the CIT(A). The CIT(A) partly allowed appeal filed by assesses vide his order dated 27-06-2012. 3. Thereafter, the AO initiated penalty proceedings u/s 271(1)(c) for concealment of particu....
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....earch. The fact remains that the assessee has filed necessary evidences and also explained to the AO that the LTCG declared is supported by proper broker's note is not rebutted by the AO before levying penalty. The CIT(A), after considering the explanations furnished by the assessees and also relying upon certain judicial precedents including the decision of Hon'ble Supreme Court in the case of Mak Data vs CIT 358 ITR 593 (SC), rejected additional ground raised by the assessees challenging the validity of initiation of penalty proceedings by holding that there could be a circumstance where the particulars of undisclosed income may contain element of both concealment of income as also inaccurate particulars of income. Therefore, it is not essential that in a particular case penalty should be levied only either on concealment of income or for furnishing inaccurate particulars of income. Aggrieved by the CIT(A)'s order, the assessee is in appeal before us. 5. The assessees have raised as many as 5 grounds of appeal. From these five grounds of appeal, the assessees have challenged levy of penalty on two grounds; viz. i) challenged the notice issued u/s 274 r.w.s. 271(1)(c) on the grou....
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....the Ld.DR strongly supported the order of CIT(A) and submitted that when penalty provisions are perused with various judicial pronouncements, it is very clear that combining of particulars of income, furnishing of inaccurate particulars of income and also deemed concealment of income, wherever there is a difference between the returned income and assessed income, there is an inference of concealment as a result of law. The Ld.DR further submitted that concealment penalty proceedings can be initiated on two charges, i.e. (i) concealment of particulars of income and (ii) furnishing of inaccurate particulars of income. If the proceedings are initiated on charge of concealment then penalty cannot be levied on the charge of furnishing of inaccurate particulars of income and vice versa. In this case, the AO has issued a notice highlighting the charge framed on the assessee which is evident that the AO has initiated penalty on both the charges, i.e. for concealment of particulars of income or furnishing of inaccurate particulars of income. Merely non striking off of the irrelevant portion in the notice or mistake in the language used in the notice cannot, by itself, invalidate the issuanc....
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....ce. We further observe from the notice issued by the AO that the AO has highlighted the portion "concealed the particulars of your income or furnished inaccurate particulars of your income". The issue of notice u/s 274 r.w.s 271(1)(c) goes to the root of the matter. By issuing notice u/s 274, the AO assumes jurisdiction to levy penalty u/s 271(1)(c) for concealment of particulars of income or for furnishing inaccurate particulars of income. Therefore, before issuance of notice, the AO has to arrive at a satisfaction as to whether he has framed the assessee for concealment of particulars of income or furnishing of inaccurate particulars of income. The notice should specify the conditions specified in section 271(1)(c) i.e. whether it is for concealment of income or for furnishing of inaccurate particulars of income. Unless the AO specifies the grounds on which he proposed to levy the penalty, it is difficult for the assessee to justify his case. If the penalty is proposed to be initiated for concealment of particulars of income and penalty is levied for furnishing of inaccurate particulars of income or vice versa, then the assessee will not have any chance to substantiate its stand ....
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....he 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 of either one or the other cannot be sustained in law. It is not open to the authority at the time of imposing penalty to impose penalty on 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 penalty proceedings are initiated on one ground, the penalty should also be imposed on the same ground. 12. An identical issue came up before the jurisdictional High Court of Bombay in the case of CIT vs Samson Perinchery (supra). The Hon'ble High Court, while dealing with the issue of notice issued u/s 274 of the Act, in a standard proforma without having struck down irrelevant clauses therein, by following the decision of Hon'ble Karnataka High Court, in the case of CIT vs Manjunatha Cotton & Ginning....
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....r is it as case of furnishing of inaccurate particulars. The apex court in the case of Ashok Pai reported [20071 292 ITR 11 (SC) at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of Manu Engineering reported in 122 ITR 306 and the Delhi\High Court in the case of Virgo Marketing P. Ltd.,171 Taxmn 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. " 5 The grievance of the Revenue before us is that there is no difference between furnishing of inaccurate particulars of income and concealment. Thus, distinct ion drawn by the impugned order is between Tweeldledum and Tweedledee. In the above view, the deletion of the penalty, is unjustified. 6. The above submiss....
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....d that the Hon'ble High Court while deciding the issue of legality of notice issued u/s 274 observed that the issuance of notice is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done. Mere mistake in the language used or mere non striking off the inaccurate portion in the notice by itself will not invalidate the notice. Though the decision relied upon by the assessee squarely covers the matter in dispute before us, because of the latest decision of the Hon'ble Bombay High Court in the case of CIT vs Samson Perinchery (supra), wherein the High Court has considered the ratio of the judgement of the Hon'ble Karnataka High Court in the case of CIT vs Manjunatha Cotton & Ginning Factory (supra), we prefer to follow the decision rendered by the Hon'ble Bombay High Court in the case of CIT vs Samson Perinchery (supra). We further observe that the decision of Hon'ble Karnataka High Court in the case of CIT vs Manjunatha Cotton & Ginning Factory (supra), has been considered by the Hon'ble Supreme Court in the case of CIT vs M/s SSA's Emerald Meadows judgement dated 11-01-2017, while dismiss....