TaxTMI 
TaxTMI 
2019 (5) TMI 182
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....d, the facts relevant for disposal of this appeal are as under: 2.1 The assessee filed the return of income for Assessment Year 2006-07 on 31.10.2006 declaring total income of Rs. 25,73,874/-. The case was taken up for scrutiny and the assessment was concluded under section 143(3) of the Act vide order dated 29.12.2008, wherein the assessee's income was determined at Rs. 60,15,011 and penalty proceedings were simultaneously initiated by issue of notice under section 274 r.w.s. 271 of the Act dated 29.08.2008. The order of assessment was subsequently rectified vide order dated 17.12.2009, whereby the assessee's income was now determined at Rs. 55,20,892/-. 2.2 Subsequent to the passing of assessment order dated 29.12.2008 and initiatio....
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....aw. 4. The Appellant begs to submit that the decision of the jurisdictional High Court in the case of CIT vs. Manjunatha Cotton 86 Ginning Factory(2013) 359 ITR 565 (Karn) is squarely applicable and therefore the impugned order of the authorities below is required to be aide. 5. The learned CIT (A) erred in disallowing the expenses genuinely incurred by the Appellant without appreciating the explanation of the Appellant. 6. Without prejudice, the disallowance as made by the CIT (A) is arbitrary, excessive and ought to be deleted in full. 7. For these and such other grounds that may be urged at the time of hearing, the Appellant prays that the appeal may be allowed. 4. Ground Nos.3 and 4 4.1 At the o....
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....actory in 359 ITR 565 (Kar). It was prayed that in the light of the above judicial pronouncements of the Hon'ble Karnataka High Court (supra), the orders levying penalty u/s 271(1)(c) of the Act for Assessment Year 2006-07 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 29.12.2008 for initiation of penalty proceedings u/s 271(1)(c) of the Act for Assessment....
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....he 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 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 Depar....
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....unity to meet those grounds. After, he places his version and tries to substantiate his claim, if at all, penalty is to be imposed, it should be imposed only on the grounds on which he is called upon 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 th....
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....cealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to nonapplication 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 H....