TaxTMI 
TaxTMI 
2019 (4) TMI 1523
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....11-12. 2. Briefly stated, the facts of the case are as under: 2.1 The assessee filed his return for Assessment Year 2011-12 on 17.01.2012 declaring total income of Rs. 1,50,280/-. 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 31.12.2013, wherein the assessee's income was determined at Rs. 8,47,960/-; in view of an addition of Rs. 6,94,000/- as unexplained cash credits and Rs. 3,678/- as income from share trading. 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 i.e., 31.12.2013 in respect of the aforesaid addition. After consider....
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....e learned Commissioner of Income Tax (Appeals) erred in law and on facts in levying of penalty u/s. 271(1)(c) even though the assessee paid the tax and interest on additional income before completion of assessment proceedings. Each of the above grounds is without prejudice to one another and the appellant craves leave of the learned Commissioner of Income Tax (Appeals), Bangalore, to add, delete, amend or otherwise modify one or more of the above grounds either before or at the time of hearing of this appeal. 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 2011-12 followin....
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....r Assessment Year 2011-12 in the case on hand is liable to be quashed / cancelled. 4.2 Per contra, the learned DR for Revenue placed reliance on the orders of the AO as being in order. 4.3.1 We have heard and carefully considered the rival contentions and submissions on record and the decision of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (Supra). The notice issued by the AO u/s 274 r.ws 271 of the Act dated 31.12.2013 for initiation of penalty proceedings u/s 271(1)(c) of the Act for Assessment Year 2011-12 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 o....
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....h 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 oil as the Section 274 makes it clear that assessee has a right to contest such proceedings and should have 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 initia....
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....on 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 penalty must be determined with reference to the information, facts and materials in the hands o....
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....he relevant clauses will lead to an inference as to non-application of mind." 4.3.3 The aforesaid view taken by the Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory (Supra) was followed by the Hon'ble Karnataka High Court in the case of SSAS Emerald Meadows in ITA No.380 of 2015 dated 23/11/2015; wherein the Hon'ble Court upheld the order of co-ordinate bench of this Tribunal, cancelling the penalty levied on the basis of the defective notice issued by the AO. Revenue's SLP filed against the said judgment of the Hon'ble High Court in the case of SSAS Emerald Meadows (Supra) has also been dismissed by the Hon'ble Apex Court in CC/I485/2016 dated 5/8/2016. 4.3.4 Respectfully followi....