AI Drafter 
TaxTMI 
TaxTMI 
2019 (3) TMI 1199
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....10. 2. Briefly stated, the facts of the case are as under: 2.1 The assessee filed his return for Assessment Year 2009-10 on 30.07.2009 declaring total income of Rs. 1,07,72,000/-. The case was taken up for scrutiny for this Assessment Year and the assessment was concluded under section 143(3) of the Act vide order dated 26.12.2011, wherein the assessee's income was determined at Rs. 1,18,49,800/-; in view of an addition of Rs. 10,77,801/- as undisclosed income. 2.2 Penalty proceedings under section 271(1)(c) of the Act was initiated simultaneously vide notice under section 274 r.w.s. 271(1)(c) of the Act of even date in respect of the aforesaid addition. After considering the assessee's replies in the matter, the AO proceeded to le....
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....ete the levy of penalty u/s 271(1)(c) for substantial cause of justice. 5. The appellant craves leaves, to add, to alter, to amend and to delete any other grounds at the time of hearing. 4. Ground No.2 4.1 At the outset , the learned Counsel for the assessee urged ground No.2 contending that the CIT(A) ought to have deleted the penalty levied u/s 271(1)(c) of the Act for Assessment Years 2012-13 following the binding decision of Hon'ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton and Ginning Factory (2013) 259 ITR 565 (Kar); since the notice u/s 274 r.w.s. 271 of the Act for initiation of penalty u/s 271(1)(c) of the Act dated 26.12.2011 was defective and issued without any application of mind by the AO, the....
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....anjunatha Cotton and Ginning Factory (Supra). The notice issued by the AO u/s 274 r.ws 271 of the Act dated 26.12.2011 for initiation of penalty proceedings u/s 271(1)(c) of the Act for Assessment Year 2009-10 in the case on hand (copy filed by the learned AR), has been carefully perused and we find that the AO has not deleted the inappropriate words and portions in the relevant paragraph of the notice; whereby it is not clear as to which default is committed by the assessee, i.e., whether it is for furnishing of inaccurate particulars of income OR concealing particulars of income that the penalty u/s 271(1)(c) of the Act is sought to be levied. 4.3.2 The Hon'ble Karnataka High Court in the case of M/s Manjunatha Cotton & Ginning Fac....
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....e full opportunity to meet the case of the Department and show that the conditions stipulated in Section 271 (I)(c) c/a not exist as such he is not liable to pay penalty. The practice of the Department sending a printed farm where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law when the consequences of the assessee not rebutting the initial presumption is serious in nature and he had to pay penalty from 100% to 300% of tax liability. As the said provisions have to be held to be standby construed notice issued under Section 274 should satisfy the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended if the show cause notice is vague. On the basis of such pro....
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....roceedings 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 discovery of facts subsequent to the imposition of penalty cannot validate the order of penalty which, when passed, was not sustainable. 61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings....