TaxTMI 
TaxTMI 
2017 (8) TMI 1375
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.... the assessee Shri Kulwant Singh Bhatia who belongs to Bhatia Group of Indore, in which search and seizure operation carried out on 25 September 2007 at various business premises and residential premises. This group is engaged in the coal trading. We are taking up the appeal for the assessment year 2002-03, there findings of which would mutatis mutandis apply for other assessment years as well. The following grounds of appeal have been taken I.T.A. No.414/Ind/2016 for the assessment year 2002-03: 1. That, the learned CIT (A) grossly erred, both on facts and in law, in upholding the Order of Penalty u/s 271(1)(c) of Income Tax Act,1961 resulting into confirmation of the penalty of Rs. 2,84,090/- 2. That, the learned CIT (A) grossly erred in confirming the penalty without considering the material fact that the appellant had neither concealed nor furnished inaccurate particulars of his income for the year under consideration and therefore,, he was not liable for any penalty u/s. 271(1)(c) of the Act. 3a) That, the learned CIT (A) grossly erred in confirming the imposition of penalty, which is solely based on the additional income declared by the appellant in his return of income....
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.... only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. The reframed question, therefore, is answered in the affirmative, i.e., the Tribunal has jurisdiction to examine a question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee. We remand the proceedings to the Tribunal for consideration of the new grounds raised by the assessee on the merits. 6. Further, the Hon`ble Jurisdictional High Court in the case of Dy. CIT vs. Turquoise Investment & Finance Ltd.[ 2006] 154 Taxman 80 (MP)[ 2008] 299 ITR 143(MP) affirmed by Hon`ble Supreme Court [2008] 168 Taxman 107(SC) wherein it was laid down that In view of the wide powers that the Tribunal is vested with as referred to and spelt out by Apex Court in National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383, the Tribunal cannot be precluded from considering the questions of law arising in an assessment proceeding not ra....
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....aled income held to be levied. Since, the assessee has declared undisclosed income only after the date of search. Therefore, the fact that such income was offered u/s 132(4) during search proceedings does not take the assessee's case out of the clutches of the above deeming provisions. In view of these facts, the AO levied a penalty of Rs. 2,48,090/- being minimum penalty @100% of the concealed income of Rs. 9,28,400/-. In the additional ground, the assessee has challenged the validity of notice under section 271(1)(c). 9. Being aggrieved the assessee has filed an appeal before the CIT (A). The assessee aggrieved with order of the AO filed appeal before Ld. CIT (A) who has also confirmed the said penalty. According to Ld. CIT (A) the provisions of section 271(1)(c) together with Explanation 5A brings the assessee liable for penalty in respect of additional income disclosed after search as the same was based on incriminating material. Accordingly, the penalties imposed by the AO for the assessment years 2002-03 to 2007-09 were sustained. In addition, penalty of Rs. 2,48,090/- for the year under consideration was confirmed. 10. Being aggrieved, the assessee has filed this appeal be....
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....oint out that no charge either of "concealment of income" or "furnishing of inaccurate particulars" was made in the assessment orders in all these cases. The learned counsel referred the assessment order and submitted that the perusal of the assessment order would show that it was simply stated that penalty proceedings are initiated u/s. 271(1)(c) and under section 271AAA . On this proposition the ld. Counsel for the assessee relied in the case of CIT v. Manjunatha Cotton Ginning Factory [2013] 359 ITR 565 (Kar)/263 CTR 153/ 93 DTR 111(Karn)[2012] 82 CCH 282 Kar HC, Asst. CIT v. M. P. State Tourism Development Corporation [2015] 26 ITJ 225 (Trib- Indore), Safina Hotels (P) Ltd. v. CIT [2016] 137 DTR 089 (Kar HC) , Uma Shankar Agarwal v. DCIT [2016] 46 CCH 0057 (Kol- Trib), Shabbir Allaudin Latiwala v. DCIT [2011] 29 CCH 0713(Rajkot-Trib) , Dilip N Shroff v. JCIT [2007] 291 TTR 519 (SC), Rishi Kumar Agarwal v. DCIT [2017] 6 TMI 396(Kol-Trib) ,Anand Satish Kumar Bhutada v. IKTO [2017] 5 TMI 482 (Pune- Trib) , Siddhi Home Makers v. ITO 5 TMI 121 (ITAT-Mum) [2017] and CIT v. SSA`s Emerald Meadows [2016] 8 TMI 1145(SC) in support of his claim. It was submitted in the case of CIT v. Manj....
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....th principle of natural justice. With regard to observation of the CIT (A), that Explanation 5A to section 271(1) (c) are applicable, it was submitted that question of applicability would only arise when penalty proceedings are properly initiated by issuing valid and proper show cause notice under section 274. Therefore, this contention of the Ld. CIT (A) becomes redundant and out of context. So far as reference to section 271(1B) is concerned the learned counsel submitted that the same is not relevant in the context of the basic issue that the penalty notices issued were defective as they did not spell out the ground on which penalty sought to be imposed and therefore, not validly issued. It was submitted that the issue of amendment of section 271(1B) with retrospective effect was raised before the Hon`ble Karnataka High Court in the case of CIT v. SSA`S Emerald Meadows [2016] 73 taxmann.com 248 (SC) as evident from the second substantial question of law raised by the Department, which the Hon`ble High Court declined to admit. Therefore, it was submitted that the Ld. CIT (A) grossly erred in confirming the penalty levied under section 271(1) (c) in these cases, which may kindly be....
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....he penalty is to be levied was not specific. It is now a settled proposition that when the charge itself is not a specific and is vague, penalty cannot be levied. The Hon`ble Supreme Court in the case of T. Ashok Pai v. CIT (2007) 292 ITR 11 (SC) has laid down that it is a settled proposition that concealment of income and furnishing inaccurate particulars of income carry different connotation. It is settled proposition that where the charge for levying penalty is not specific, the notice issued under section 271(1)(c) is bad in law as it does not specify by which limb of section 271(1)(c) of the Act under which it has been initiated. When the notice does not specify the charge for levy of penalty, it has been held that the penalty cannot be levied. 13. Further reliance in the case of CIT v. Manjunatha Cotton Ginning Factory [2013] 359 ITR 565 (Kar)/263 CTR 153/ 93 DTR 111(Karn)[2012] 82 CCH 282 Kar HC, wherein, it was observed in para 59 as under: "the practice of the Department sending a printed form where all the ground mentioned in Section 271 are mentioned would not satisfy the requirement of law when the consequences of the assessee not rebutting the initiated presumption ....
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....raw support from the recent decision of coordinated bench Mumbai Tribunal in the case of Meharjee Cassinath Holdings Pvt. Ltd. v. ACIT Circle 4(2) in I.T.A. No. 2555/ Mum/2012 order dtd. 28.04.2017 has also held that the notice issued u/s. 274 by the AO is untenable as it suffers from the vice of non-application of mind. In this case though the AO recorded in the assessment order that penalty proceeding under section 271(1)(c) are to be initiated for furnishing of inaccurate particulars of income, however, in the notice u/s. 274 both the limbs of section 271(1)(c) were reproduced in the preforma notice and the relevant clauses were not struck off. Whereas in the case of the assessee no specific charges were levied in the assessment order as well as penalty show cause notice. 15. The ld. Counsel for the assessee relied the case of M.P. Tourism Development Corporation (supra) which held that satisfaction of the AO about concealment is must before levying penalty under section 271(1)(c). In this regard, our view is also supported by the decision of Hon`ble Supreme Court in case of CIT v. Suresh Chandra Mittal [2000] 251 ITR 9(SC), wherein the Supreme Court has upheld the decision of ....