TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 1581
X X X X Extracts X X X X
X X X X Extracts X X X X
....n deleting the penalty u/s. 271(1)(c) of the Act. The facts and circumstances under which penalty u/s 271(1)(c) of the Act was imposed on the assessee by the AO are that in this case a search and seizure operation was carried out in respect of 'Rupa Group' of cases on 07.11.2013 and on subsequent dates. Late Baijnath Agarwal was one of the assessee of this group. The assessee filed his original return of income on 29.07.2011 declaring total income of Rs. 12,216/-. Subsequently, in pursuance to notice u/s. 153C of the Act dated 09.11.2015, the assessee filed his return on 12.01.2016 showing total income of Rs. 1,43,74,816/-. The return was selected for compulsory scrutiny and the assessment was completed u/s. 153C/143(3) of the Act on 22.03.2016 at a total income of Rs. 1,43,74,820/-. During the course of search and seizure operation a large number of books of account and documents were seized and impounded. Further, a number of pen drive, computer hard disks and other electronic storage devices have been seized and their extract was taken and it was found that the huge cash payment was made by the group for house construction, payment made for car parking space, profit from sale of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reproduced for the purpose of ready reference: "Whereas in the course of proceedings before me for the assessment year 2011-12 it appears that you have concealed the particulars or furnished inaccurate particulars of such income." 4. The ld. Counsel for the assessee drew our attention to the decision of the Hon'ble Karnataka High Court in the case of CIT vs. SSA's Emerald Meadows in ITA No.380 of 2015 dated 23.11.2015 wherein the Hon'ble Karnataka High Court following its own decision in the case of CIT vs Manjunatha Cotton and Ginning factory (2013) 359 ITR 565 took a view that imposing of penalty u/s 271(1)(c) of the Act is bad in law and invalid for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. The ld. Counsel further brought to our notice that as against the decision of the Hon'ble Karnataka High Court the revenue preferred an appeal in SLP in CC No.11485 of 2016 and the Hon'ble Supreme Court by its order dated 05.08.2016 dismissed the SLP preferred by the department. The ld. Counsel also brought to our n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not furnished. However a gist of the ratio laid down in the decision has been given in the written note filed before us. 9. In the case of CIT Vs. Kaushalya (supra), the Hon'ble Bombay High Court held that section 274 or any other provision in the Act or the Rules, does not either mandate the giving of notice or its issuance in a particular form. Penalty proceedings are quasi-criminal in nature. Section 274 contains the principle of natural justice of the assessee being heard before levying penalty. Rules of natural justice cannot be imprisoned in any straight-jacket formula. For sustaining a complaint of failure of the Principles of natural justice on the ground of absence of opportunity, it has to be established that prejudice is caused to the concerned person by the procedure followed. 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 of the inaccurate portion cannot by itself invalidate the notice. The ITAT Mumbai Bench in the case of Dhanraj Mills Pvt.Ltd. (supra) followed the decision render....
X X X X Extracts X X X X
X X X X Extracts X X X X
....additions made under Section 69 of the Act, which was struck down by the Appellate Authority, the initiated penal proceedings, no longer exists. If the Appellate Authority had initiated penal proceedings on the basis of the addition sustained under a new ground it has a legal sanctum. This was not so in this case and therefore, on both the grounds the impugned order passed by the Appellate Authority as well as the Assessing Authority was set-aside by its order dated 9th April, 2009. Aggrieved by the said order, the revenue filed appeal before High Court. The Hon'ble High Court framed the following question of law in the said appeal viz., 1. Whether the notice issued under Section 271(1)(c) in the printed form without specifically mentioning whether the proceedings are initiated on the ground of concealment of income or on account of furnishing of inaccurate particulars is valid and legal? 2. Whether the proceedings initiated by the Assessing Authority was legal and valid? The Hon'ble Karnataka High Court held in the negative and against the revenue on both the questions. Therefore the decision rendered by the ITAT Mumbai in the case of Earthmoving Equipment Service Corporation (sup....