TaxTMI 
TaxTMI 
2019 (4) TMI 1026
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....le Apex Court in MST Katiji and Others (1987) 167 ITR 471 (SC). The reasons for delay in filing this appeal have been explained in the Affidavit at paras 3 to 8 thereof, are extracted hereunder:- 1. That being aggrieved by the order of penalty u/s 271[1][c] of the Act passed by the learned A.O. for the aforesaid assessment year, I had instituted an appeal before the learned Commissioner of Income-tax [Appeals]- 1 and later file transferred to the learned CIT[A]-3, BENGALURU. 2. That, the learned Commissioner of Income-tax [Appeals] disposed off the appeal instituted by me in ITA No.432]/CIT[A]-3/BNG/2016-17 by his order dated 01/03/2018, which was received by my authorized representative on 07/03/2018 and the appeal against the said appellate order ought to have been filed before the Hon'ble ITAT on or before 06/05/2018. 3. That, the appeal against the said appellate order came to be instituted before the Hon'ble Income-tax Appellate Tribunal, Bangalore Bench, Bangalore belatedly and there is a delay of 19 days in filing the appeal. The reasons for the delay in filing the appeal are explained hereinafter. 4. That, soon after bein....
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....onsideration and adjudication. O R D E R 3. Briefly stated the facts relevant for disposal of this appeal are as under:- 3.1 The assessee filed the return for Assessment Year 2005-06 on 31.05.2005 declaring total income of Rs. 1,08,250/-. Proceedings under section 147 of the Act were initiated for this Assessment Year and notice under section 148 of the Act was issued to the assessee on 18.08.20106. As there was no response / compliance by the assessee to notices issued under section 143(2) / 142 of the Act, the assessment was concluded ex-parte under section 144 r.w.s 147 of the Act vide order dated 26.03.2007, wherein the assessee's income was determined at Rs. 9,49,677/-; in view of an addition of Rs. 8,41,427/- on account of re-computation of capital gains by virtue of denying the assessee's claim for exemption under section 54F of the Act. 3.2 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 viz., 26.03.2007 in respect of the aforesaid addition. After considering the assessee's replies in the matter, the AO proceeded to levy penalty of Rs. 1,75,000/- under sect....
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....-.,,lowed and Justice rendered. 4.3 We have heard the rival contentions in the matter of admission of the additional grounds (supra). Taking into account the factual matrix of the case and that the additional grounds raised, we find that they are purely questions of law that do not involve facts otherwise those that are already on the records of the Department. They also go to the very root of the matter of jurisdiction and validity of the imposition of penalty under section 271(1)(c) of the Act. Further, taking into account the ratio of the decision of the Hon'ble Apex Court in the case of NTPC Ltd., (229 ITR 383) (SC), we admit the additional grounds raised (supra) for consideration and adjudication. 5. Additional grounds Nos. 1 & 2 - Defective notice issued under section 274 r.w.s. 271 of the Act 5.1 At the outset , the learned Counsel for the assessee urged additional ground Nos.1 and 2 contending that the CIT(A) ought to have deleted the penalty levied u/s 271(1)(c) of the Act for Assessment Years 2005-06 following the binding decision of Hon'ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Kar); since the no....
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.... of M/s Manjunatha Cotton & Ginning Factory in (359 1TR 565) (Kar) has held that a notice issued u/s 274 r.ws 271 of the Act without specifying the nature of default; i.e. whether the notice is issued for concealment of particulars of income or furnishing of inaccurate particulars of income; is invalid and the consequential penalty proceedings/orders are also not valid. The relevant portion of the aforesaid judgment of the Hon'ble Karnataka High Court (Supra) at paras 59 to 61 are extracted hereunder:- "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 rase of relying on deeming provision contained in Explanation-I or in Explanation- 1(B), then though penalty proceedings are i....
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....ise 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 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 ....