TaxTMI 
TaxTMI 
2019 (4) TMI 205
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.... out of the penalty of Rs. 12,71,285/- imposed by the Assessing Officer being 100% of tax on the income sought to be evaded by the assessee company." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : assessee company is into the business of providing services in the line of production of films, documentary films, rendering services in media and entertainment industry. On the basis of assessment passed under section 143 (3) of the Act at the loss of Rs. 1,07,51,103/- as against the returned loss of Rs. 1,48,65,293/- by making addition of Rs. 41,14,190/- (Rs.38,56,852/-, Rs. 1,57,354/- & Rs. 99,984/- on account of interest received from shareholders on delayed payment towards part of share capital, on account of disallowance u/s 14A and on account of disallowance on account of amount written off respectively), AO initiated the penalty proceedings u/s 271(1)(c) of the Act by way of issuance of notices u/s 274 read with section 271(1)(c) of the Act. Declining the contentions raised by the assessee, AO proceeded to levy the penalty of Rs. 12,71,285/- on the ground that the assessee has furnished inaccurate particulars within the meaning of Explan....
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....to satisfy himself that as to whether the assessee has concealed the particulars of income or have furnished inaccurate particulars of income in the assessment order as well as in the show cause notice issued under section 271(1)(c) / 274 of the Act and relied upon the decision of Hon'ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory-359ITR 565 and CIT vs. SSA's Emerala Meadows -73 taxmann.com 241 (kar.) (Revenue's SLP dismissed in 242 taxman 180). 10. In order to proceed further, we would like to peruse the notice dated 22.12.2010 issued by AO u/s 274 read with section 271(1)(c) of the Act to initiate the penalty proceedings which is extracted as under for ready perusal:- "NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(c) OF THE INCOME TAX ACT, 1961. Income tax Office New Delhi. Dated: 22.12.2010 To, M/s Moving Picture Company India Ltd., C/o Oberoi Sood & Kapoor, 606, Vishal Bhawan 95, Nehru Place, New Delhi-110 019. Whereas in the course of proceedings before me for the assessment year 2008-09 it appears to me that you:- * X Have without reasonable caus....
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....sue held that when the AO has failed to issue a specific show-cause notice to the assessee as required u/s 274 read with section 271(l)(c), penalty levied is not sustainable. The operative part of the judgment is reproduced as under:- "59. As the provision stands, the penalty proceedings can be initiated on various ground set out therein. If the order passed by the Authority categorically records a finding regarding the existence of any said grounds mentioned therein and then penalty proceedings is initiated, in the notice to be issued under Section 274, they could conveniently refer to the said order which contains the satisfaction of the authority which has passed the order. However, if the existence of the conditions could not be discerned from the said order and if it is a case of relying on deeming provision contained in Explanation 1 or in Explanation 1 (B), then though penalty proceedings are in the nature of civil liability, in fact, it is penal in nature. In either event, the person who is accused of the conditions mentioned in Section 271 should be made known about the grounds on which they intend imposing penalty on him as the Section 274 makes it clear that ass....
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....round. 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 that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). 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 T Ashok Poi v. CIT [2007] 292 ITR 11 /161 Taxman 340 at page 19 has held that concealment of income and furnishing inaccurate part....
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....he decision rendered by the Hon'ble Madras High Court in Sundaram Finance Ltd. vs. CIT (2018) 403 ITR 407 (Madras), in which SLP has also been dismissed by Hon'ble Supreme Court in the case cited as Sundaram Finance Ltd. vs. CIT (2018) 99 taxmann.com 152 (SC) and also relied upon the judgment of CIT vs. Smt. Kaushalya - 216 ITR 660 (Bombay) & Trimurti Engineering Works vs. ITO - (2012) 138 ITD 189 (Del.). 16. Hon'ble Madras High Court in Sundaram Finance Ltd. (supra) upheld the order passed by the Tribunal confirming the penalty levied on the basis of notice issued under section 274 read with section 271(1)(c) of the Act in which specific charge was not pointed out by returning the following findings :- "16. We have perused the notices and we find that the relevant columns have been marked, more particularly, when the case against the assessee is that they have concealed particulars of income and furnished inaccurate particulars of income. Therefore, the contention raised by the assessee is liable to be rejected on facts. That apart, this issue can never be a question of law in the assessee s case, as it is purely a question of fact. Apart from that, t....