TaxTMI 
TaxTMI 
2018 (12) TMI 897
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....ed income of Rs. 41 lacs. Subsequently during assessment proceedings the AO noted that during the year under consideration the assessee had purchased two plots measuring 270 sq.yd. each situated at Moja Barewal Awaria, Ashapuri, Ludhiana. The source of investment in these properties Rs. 41 lacs was stated by the assessee as being out of the surrendered income of Rs. 41 lacs. The Assessing Officer noted that the surrender was made after detection of concealment by the Department by way of search u/s 132 of the Act and therefore initiated penalty proceedings on the same u/s 271(1)(c) of the Act. During penalty proceedings the assessee contended that the surrender had been suo moto disclosed by the assessee in his return of income and had not been added by the Assessing Officer and further that no infirmity had been found in the explanation of the assessee or the documents submitted in support of his contention. It was therefore contended that no penalty u/s 271(1)(c) was leviable in the present case. The Assessing Officer rejected the contention of the assessee and levied penalty u/s 271(1)(c) of the Act, stating that the surrender was covered only in the year of search or the pre....
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....ITAT Chandigarh Bench on 19.3.2018. Copy of the order was placed before us. On perusing the records of the proceedings before us, it was noticed that the Ld. counsel for assessee on several occasions had sought adjournment stating that the facts and circumstances of the present case are identical to that in the case of Munish Jain Vs. DCIT in ITA Nos.254 & 255/Chd/2017. The Ld. counsel for assessee vide its letters dated 19.9.2017, 22.11.2017 and 19.2.2018 had stated so. In all the above letters the Ld. counsel for assessee pleaded that the aforesaid case had been heard and since the facts were identical to that in the present case the hearing in the present case was sought to be adjourned till the order in the case of Munish Jain Vs. DCIT in ITA Nos.254 & 255/Chd/2017 was pronounced. Since admittedly, the facts of the present case were identical to that in the case of Munish Jain Vs. DCIT in ITA Nos.254 & 255/Chd/2017, and the order in the said case had been pronounced by the Tribunal, the reason for which adjournment was sought by the assessee on earlier occasions no longer remained relevant and further no reason was given for seeking adjournment on the present date of hearing....
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....Apex Court in the case of NTPC Ltd. vs CIT (229 ITR 383)(SC) copy enclosed, Hon'ble Bench is humbly requested that the additional grounds of appeal as raised by the appellant may kindly be admitted as these grounds are crucial in passing a judicial matter and in the interest of Justice. Thanking you, Yours sincerely, (CA Rajeev K. Gupta) (Counsel) It was also stated in the said application that being a legal ground the same be admitted for adjudication in view of the decision of the Hon'ble Apex Court in the case of NTPC Limited Vs. CIT, 299 ITR 383. 7. The Ld. DR did not object to the same. 8. Since the ground raised by the assessee is a legal ground challenging the validity of the order passed u/s 271(1)(c) of the Act, we hereby admit the same in view of the decision of the Hon'ble Supreme Court in the case of NTPC Limited (supra). 9. Further it was pointed out, as stated earlier, that the facts of the present case and the issue involved were identical to that in the case of Munish Jain (supra) and the decision rendered therein by the ITAT, dismissing all the grounds raised by the assessee ,thereby upholding the levy of ....
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....ssee being found during search to be the owner of assets acquired out of earlier undisclosed income. The relevant findings of the ITAT are as under: "13. We have heard the rival contentions. The genesis of the arguments of the Ld. counsel for assessee originates from the order of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory (supra) which was followed by the Hon'ble Karnataka High Court again in SSA's Emerald Meadows (supra) wherein SLP filed before the Hon'ble Supreme Court was dismissed and the said judgment was also relied upon by the Tribunal in a number of decisions rendered and cited by the Ld. counsel for assessee before us. It is, therefore, pertinent to understand the reasoning laid down by the Hon'ble Karnataka High Court in Manjunatha Cotton & Ginning Factory (supra) while holding that the notice u/s 274 must specifically spell out the charge fixed on the assessee for the purpose of levy of penalty whether concealment or furnishing of inaccurate particulars of income by striking out the irrelevant clause in the notice. Para 59 of the order deals with the same and is being reproduced hereunder for refere....
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....other cannot be sustained in law. It is needless to point out satisfaction of the existence of the grounds mentioned in Section 271(1)(c) when it is a sine qua non for initiation 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 pena....
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....ting penalty is clearly coming out from the order, reference to the order in the notice u/s 274 of the Act would be sufficient to make the person charged with the same, aware of the charge. As per the Hon'ble High Court, reference to the order in the notice which contains clear satisfaction of the authority of the existence of any of the grounds would be sufficient compliance of the aforesaid condition. The Hon'ble High Court further held that in situation where the order of the authority is not clear vis-a-vis ground for which it is initiated, as in cases where there is deemed concealment as per Explanation-1 to section 271(1)(c) of the Act and deemed satisfaction of the authority of concealment as per section 271(1)(b) of the Act, then, the Hon'ble High Court has held, that the notice should clearly reflect the exact ground for which penalty is levied. The Hon'ble High Court has in very clear words explained that the proceedings being penal in nature the assessee should be made aware of the grounds on which penalty is being levied so that he can adequately defend himself. The crux of the judgment therefore is that the notice u/s 274 should clearly bring out the charge aga....
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....ade under section 274 read with section 271 of the Income Tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorized representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271(1 )(c) of the I.T.Act,1961. (SUKHJIT SINGH) Dy. Commissioner of Income Tax, Central Circle-Ill, Ludhiana. The charge against the assessee is therefore on both Courts which as pointed out above by us has been held to be plausible as the same can be overlapping in certain circumstances. 15. There is, therefore, no infirmity in the notice and the ground for which penalty was initiated on the assessee has been clearly and unambiguously brought out in the said notice. The assessee has also, we find, responded to the notice and was given full opportunity to defend himself against the said charges which was duly availed of also by the assessee. Necessary and requisite reply defending himself from the charges was filed before the Assessing Officer. It is not the case of the assessee that due opportunity was not given to the asses....
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.... 132 was initiated on or after 1st day of June 2007. Further 'Explanation 5' has been made applicable to cases where search was initiated before 1st day of June 2007. In the present case under consideration search action u/s 132 was initiated on 30.06.2009, therefore, this case is covered by the provisions of 'Explanation 5A' which is reproduced as under: "[Explanation 5A- Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007., the assessee is found to be the owner of- (i) any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilizing (wholly or in part) his income for any previous year; or (ii) any income based on any entry in any books of account of other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and,- (a) Where the return of income for such previous year has ....
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.... the statement recorded u/s 132(4) of the Act. The assessee filed return of income, in response to the said notice u/s 153A of the Act, on 23.7.2009 and on the date of filing the return, the Explanation 5A inserted by the Finance (No.2)Act of 2009, with retrospective effect from 1.6.2007, was on the Statute. In the present case, return of income was filed in response to notice u/s 153A of the Act, which is covered by Explanation 5A to Section 271(1) (c) of the Act, inserted by Finance (No.2) Act of 2009. The facts of present case, are not similar to the facts, as obtaining, in the case law, relied upon by the assessee, as discussed above. 30. Further, the provisions of Section 153A are specifically are brought on the Statute book, for assessment, in case of search u/s 132(1) of requisition of books of account u/s 132A of the Act. The opening sentence of Section 153A of the Act, overrides the provisions of Section 139, 147, 148, 149, 151 and 153 of the Act. The assessee has declared undisclosed income, in the return filed- in response to notice u/s 153A of the Act and the CIT(Appeals), having regard to the facts of the case, invoked the currently applicable Explanatio....
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.... be the owner of- (i) any money, bullion, jewellery or other valuable article or thing Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income for any previous year; or (ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income(wholly or in part) for any previous year, which has ended before the date of search and,- (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; (b) the date for filing the return of income for such previous year has expired but the assessee has not filed the return. Then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of ....