TaxTMI 
TaxTMI 
2018 (1) TMI 1241
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2. The assessee has also raised the additional ground:- "In the facts and circumstances of the case and in law the ld. AO has erred in imposing the penalty u/s 271(1)(c) without specifically pointing out in the show cause notice, whether the penalty was proposed on concealment of particulars of income or for furnishing inaccurate particulars of income." Since, the additional ground raised by the assessee is legally in nature and goes to the root of the matter and therefore, first we take up the additional ground. 3. I have heard the ld. AR as well as ld. DR and considered the relevant material on record for admission of additional ground. The assessee is challenging the validity of notice issued u/s 274 r.w.s. 271(1)(c) of the IT Act dated 30.08.2013 the copy of the notice has been filed by the assessee which is not in dispute. Therefore for adjudication of the additional ground no investigation or examination of new facts is required but the same can be decided on the basis of the facts already record. Accordingly, in view of the decision of Hon'ble Supreme Court in case of National Thermal Power Co. Ltd. vs. CIT 229 ITR 383 the additional ground raised by the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot offered to tax. He has relied upon the explanation 1B of section 271(1)(c) as well as decision of Coordinate Bench of this Tribunal dated 29.09.2017 in case of M/s Airen Metals Pvt. Ltd. vs. CIT in ITA No. 820/JP/2016. The ld. DR thus submitted that the decisions relied upon the ld. AR are not applicable in the facts and circumstances of the case when the assessee surrendered the income discovered by the AO during the course of enquiry. He has relied upon the orders of the authorities below. In rejoinder the ld. AR of the assessee has submitted that the Assessing Officer in the assessment order passed u/s 143(3) of the Act was not sure and consistent about the ground on which the penalty was initiated. He has pointed out that at page 3 of the assessment order in para second the AO stated that the assessee has willfully concealed its income and has given inaccurate particulars of income while not showing actual sale and accordingly the penalty proceeding were initiated separately whereas at the end of the assessment order the AO has again stated that penalty proceeding u/s 271(1)(c) r.w.s. 274 of the Income Tax Act has been initiated separately for concealment of income or furnis....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the assessee. 7. As regards the decision of Coordinate Bench of this Tribunal in case of M/s Airen Metals Pvt. Ltd. vs. ACIT (supra), I find that in the said case the AO issued two show cause notices u/s 274 of the Act and only second show cause notice issued by the AO specified grounds for which the penalty proceeding were initiated to make the assessee aware about the default committed by the assessee. Further, in the said case the assessee did not respond to the show cause notice and did not attend the penalty proceeding, therefore, no explanation was offered by the assessee before the AO in the penalty proceeding. Accordingly, the said decision is based on peculiar facts of the said case and cannot be applied in the case in hand where the AO has issued only one show cause notice u/s 274 without specifying the grounds for which the penalty u/s 271(1)(c) was proposed to be levied. The Hon'ble Karnataka High Court in case of CIT Manjunatha Cotton & ginning Factory (supra) has dealt with this issue extensively and held in 59 to 63 as under:- "59. As the provision stands, the penalty proceedings can be initiated on various ground set out therein. If the order passed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 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 initiated on one ground, the penalty should also be imposed on the same ground. Where the basis of the initiation of penalty proceedings is 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nly be limited to the issue of penalty, so that validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter in penalty proceedings. It is not possible to give a finding that the reassessment is invalid in such penalty proceedings. Clearly, there is no identity between the assessment proceedings and the penalty proceedings. The latter are separate proceedings that may, in some cases, follow as a consequence of the assessment proceedings. Though it is usual for the Assessing Officer to record in the assessment order that penalty proceedings are being initiated, this is more a matter of convenience than of legal requirement. All that the law requires, so far as the penalty proceedings are concerned, is that they should be initiated in the course of the proceedings for assessment. It is sufficient, if there is some record somewhere, even apart from the assessment order itself, that the Assessing Officer has recorded his satisfaction that the assessee is guilty of concealment or other default for which penalty action is called for. Indeed, in certain cases, it is possible for the Assessing Officer to issue a penalty notice or initiate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....from tax net and as opined by the Assessing Officer in the assessment order. (l) Only when no explanation is offered or the explanation offered is found to be false or when the assessee fails to prove that the explanation offered is not bonafide, an order imposing penalty could be passed. (m) If the explanation offered, even though not substantiated by the assessee, but is found to be bonafide and all facts relating to the same and material to the computation of his total income have been disclosed by him, no penalty could be imposed. (n) The direction referred to in Explanation IB to Section 271 of the Act should be clear and without any ambiguity. (o) If the Assessing Officer has not recorded any satisfaction or has not issued any direction to initiate penalty proceedings, in appeal, if the appellate authority records satisfaction, then the penalty proceedings have to be initiated by the appellate authority and not the Assessing Authority. (p) Notice under Section 274 of the Act should specifically state the grounds mentioned in Section 271(l)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars ....