TaxTMI 
TaxTMI 
2019 (3) TMI 696
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....e at the residence and clinic of assessee on 17-2-2011. The assessee at that time was 80 years old and during the search period his wife aged about 77 years was only at residence, with the assessee. The assessee has one son Shri Dinesh Sharma and three daughters. His son and two daughters alongwith theirs respective families are permanently residing in USA while one daughter along with her family living in Jaipur separately to the assessee. In course of search petty cash, small quantity of jewellery and some loose papers and diaries etc. were found. Statement(s) of the assessee Shri Ratan Kumar Sharma was recorded and his said statement(s) he admitted and surrendered additional income in his hands, in the hands of his wife Smt. Maya Sharma, in the hands of his son Dinesh Sharma and grand daughter Neha Sharma. The Ld. A.O. issued notice u/s 153A in case of assessee. The assessee filed his return of income in response to said notice issued u/s 153A declaring an income of Rs. 1,59,92,770/-. The Ld. A.O. completed assessment u/s 153A/143 (3) at an income of Rs. 3,52,99,670/- after making an addition of Rs. 1,74,01,200/- on account of long term capital gain on sale of immovable property....
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....necessary portions of the notice. If the A.O. was of the view that the assessee has concealed the income or furnishing inaccurate particulars of income then he should have deleted or not mentioned the other limb for imposition of penalty i.e. concealing the particulars of income. The above act of the A.O. clearly shows that the entire exercise of initiation of penalty proceedings has been done without application of mind. 7. Our attention was also invited to the penalty order passed on 30.03.2016 by the A.O., wherein the penalty u/s 271(1)(c) is imposed on addition of income of Rs. 1,46,37,002/- on account of LTCG by holding that the assessee had furnished inaccurate particulars of income and concealed his income. The relevant findings of A.O. in last para on page 4 of the penalty order is as under: - "On the basis of above discussion, I hold that the assessee had furnished inaccurate particulars of income and concealed his income of Rs. 1,46,37,002/- as sold immovable property is hereby treated as Long Term Capital Gain in the hands of the assessee. Hence, it is a fit case for imposing the penalty u/s 271 (1) (c) of I. T. Act, 1961. I therefore imposed penalty of Rs. 33,00,000/....
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.... And CIT Vs Manjunatha Cotton & Ginning Factory & others [2013] 359 ITR 565. 8. Further reliance was placed on the decision of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565 (Karnataka) after referring to the decision of Hon'ble Supreme Court in the case of T. Ashok Pai (Supra) held as under: - ".......... Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pai reported in 292 ITR 11 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 reported in 171 taxman 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....
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....if it is so he has to say so in the notice and record a finding in the penalty order ...." 11. Further more, reliance was placed on the decision of the Hon'ble Karnataka High Court in the case of Muninga Reddy Vs. ACIT (2017) 396 ITR 398 and the Telengana & Andhra Pradesh High Court in PCIT Vs. Baisetty Revethi (2017) 398 ITR 88 held the same view. In the above said judgments the Hon'ble courts decided the law position on the issue that the concealment of income and furnishing inaccurate particulars of income, two are different defaults and they cannot be intermixed. Therefore, the order of Ld. CIT (A) holding that it cannot be concluded that penalty notice did not specify the limb for initiation of penalty proceedings i.e. for concealment of income or for furnishing inaccurate particulars of income that itself cannot be reason for invalidating penalty proceedings is wrong and order of CIT (A) deserves to be set aside on this issue and penalty levied by AO deserves to be cancelled. 12. Further reliance was placed on the decision of ITAT, Jaipur Bench in the case of Narayana Heights & Towers, Vs. I.T.O. Ward - 2- 4 Jaipur ITA No. 1033/JP/2016 has canceled the penalty by holding ....
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....naccurate particulars of income. The Hon'ble Karnataka High Court in the case of CIT and Another Vs. Manjunatha Cotton and Ginning Factory, 359 ITR 565 (Kar.) has held that the notice u/s 274 of the Act should specifically state as to whether penalty is being proposed for concealment of particulars of income or inaccurate particulars of income. In the present case notice under section 274 dated 25/3/2015 enclosed at paper book page 16 reads as under: - "Penalty Notice Under Section 274. Read with Section 271 of the IT Act, 1961. Whereas in the course of proceedings before me for the Assessment Year 2012-13. It appears to me that you have: - Read With Section 271 (1) (c) concealed particulars of income or furnished inaccurate particulars of income." Therefore, there is no specific charge by the Assessing officer. Further, it is noted that the Assessing officer in penalty order (as noted hereinabove) has proceeded on the basis of the assumption that the assessee is satisfied with the assessment order. Therefore, it appears that the assessee has nothing to say and has no objection regarding the imposing of the penalty under section 271 (1) (c) of the Act. In our consider....
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....ital gains on the property so sold by the assessee. 16. On the other hand, the ld DR has contended that the Assessing Officer has properly recorded satisfaction for initiation of penalty. For the defect in notice, reliance was placed by the ld DR on the decision of the ITAT Mumbai benches in the case of Shri Mahesh M. Gandhi Vs ACIT in ITA No. 2976/Mum/2016 dated 27/02/2017 and on the decision of the Hon'ble Supreme Court in the case of Mak Data Vs CIT (2013) 358 ITR 593 (SC). As per the ld DR the mere fact that the penalty notice does not specify the limb for initiation of penalty proceedings i.e. for concealment of income or for furnishing of inaccurate particulars of income that itself cannot be a reason for invalidating the penalty proceedings, if the reasons for initiating the penalty are discernible from the assessment order. 17. We have considered the rival contentions and carefully gone through the orders of the authorities below. The facts and circumstances vis a vis and the arguments of the ld AR as well as the ld DR are same as discussed by us in ITA No. 781/JP/2017. The précised observation and finding of the Bench is reproduced as under: "15. We have con....
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....see is being visited and in all those decisions, Hon'ble Courts have repeatedly held that where the jurisdictional notice is vague, similar to the one in the present case, the consequent levy cannot be sustained. 17. In this connection, reliance is first placed upon the judgment of the Hon'ble Karnataka High Court In the case of CIT v. Manjunatha Cotton and Ginning Factory & Ors. and Veerabhadrappa Sangappa and Co. (359 ITR 565, 577, 601, 603-604) in which the facts are similar. In those bunch of tax appeals, several assessee and several issues were involved. In so far as I.T.A. No. 5020 of 2009 was concerned, one of the substantial questions on which the appeal was filed by the revenue was: "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?" 18. While answering the above in favour of the assessee, the following findings were recorded by the Hon'ble Court: "61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied i....
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....he aforesaid judgment was unsuccessfully challenged by the revenue before the Supreme Court, as it was rejected vide Petition for Special Leave to Appeal (C) No. 13898/2014 dated 11.07.2016. Reliance was next placed upon another judgment of the Hon'ble Karnataka High Court in the case CIT v. SSA'S Emerald Meadows (Income Tax Appeal No. 380 of 2015 decided on 23.11.2016). In this case also s similar situation arose in as much as the Hon'ble Court was required to adjudicate on the following substantial question: (1) Whether, omission of assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case?" 22. The aforesaid question was dealt with by the Hon'ble Court in favour of the assessee in the following words: "3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with section 271(1)(c) of the Income-tax Act 1961 (....
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....ng Officer himself was not sure as to whether he had proceeded on the basis that the assessee had concealed his income or had furnished inaccurate particulars of income. This, according to the Hon'ble Supreme Court, deprives the assessee of a fair opportunity to explain its stand, thereby, violates the principles of natural justice. As held by the Hon'ble Supreme Court in CIT v/s Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC), the aforesaid principle laid in Dilip N. Shroff (supra) still holds good in spite of the decision of the Hon'ble Supreme Court in UOI v/s Dharmendra Textile Processors (2008) 306 ITR 277 (SC). The Hon'ble Jurisdictional High Court in CIT v/s Smt. Kaushalya & Ors., [1995] 216 ITR 660 (Bom), observed that notice issued under section 274 must reveal application of mind by the Assessing Officer and the assessee must be made aware of the exact charge on which he had to file his explanation. The Court observed, vagueness and ambiguity in the notice deprives the assessee of reasonable opportunity as he is unaware of the exact charge he has to face. The Hon'ble Jurisdictional High Court in Samson Perinchery (supra), following the decis....