TaxTMI 
TaxTMI 
2019 (6) TMI 1283
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 386 ITR (St.) 13 (SC) and had also relied on the Karnataka High Court judgment in the case of CIT v. Manjunatha Cotton and Ginning Factory [2013] 359 ITR 565 (Karn). The said case law were relied on by the learned authorised representative for the proposition that penalty initiated on one limb of section 271(1)(c) and imposed on another limb of section 271(1)(c) is not sustainable. 2. The hon'ble Judicial Member while rejecting this ground of the appeals has held that simply by initiating proceedings for one limb of section 271(1)(c) and passing penalty order on another limb of section 271(1)(c) does not make the order illegal. The hon'ble Judicial Member has held that the case law of the hon'ble Supreme Court in the case of SSA's Emerald Meadows as relied on by the learned authorised representative was a special leave petition filed by the Revenue which had been dismissed and such dismissal of the special leave petition does not lay down a law. The hon'ble Judicial Member has further held that a Larger Bench of the hon'ble Supreme Court in the case of K. P. Madhusudhanan v. CIT [2001] 251 ITR 99 (SC) has held that the Explanation to section 271(1)(c) is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....an clearly demonstrate that the hon'ble Supreme Court in that case had decided the issue as to whether notice under section 271 is necessary if the Assessing Officer finds that the assessee had not substantiated any explanation or failed to prove that such explanation was bona fide. Then in these circumstances the hon'ble court had held that further notice under section 271 was not necessary. 5. The hon'ble Andhra Pradesh High Court in I. T. A. No. 684 vide its recent judgment dated July 13, 2017 (Principal CIT v. Smt. Baisetty Revathi [2017] 398 ITR 88 (T&AP) has examined the applicability of the case law of K. P. Madhusudhanan in the context of the hon'ble Karnataka High Court judgment in the case of Manjunatha Cotton and Ginning Factory and has held that the case law of K. P. Madhusudhanan has no application to the Karnataka High Court decision in the case of Manjunatha Cotton and Ginning Factory. The relevant findings of the hon'ble court are reproduced below (page 93 of 398 ITR) : "11. It would be apposite at this stage to consider the judgment of the Karnataka High Court in Manjunatha Cotton and Ginning Factory (supra). Therein, a Division Benc....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Manu Engineering Works [1980] 122 ITR 306 (Guj), a Division Bench of the Gujarat High Court observed that the Assessing Officer must give a positive finding as to whether there is conceal ment of income by the assessee or whether any inaccurate particulars of such income had been furnished by the assessee. In the event there was no such clear-cut finding, the penalty order was held liable to be struck down. 13. Smt. Kiranmayee, the learned counsel, placed reliance on the judgment of the Supreme Court in K. P. Madhusudhanan v. CIT [2001] 251 ITR 99 (SC) ; [2001] 6 SCC 665 ; AIR 2001 SC 2704 ; [2001] Law Suit (SC) 1093. Therein, the Supreme Court held that it is not necessary for the Assessing Officer, while issuing a notice under section 271(1)(c), to expressly invoke Explanation 1(B) appended to the provision. It is however relevant to note that Explanation 1(B) merely adverts to a case of failure of an assessee to substantiate the explanation offered whereby the amount added or disallowed while computing the total income of such person for the purposes of the penalty provision shall be deemed to represent the income in respect of which particulars had been concealed. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the existence of the grounds mentioned in section 271(1)(c) when it is a sine qua non for initiation of proceedings, the penalty proceedings should be confined only to those grounds and the said grounds have to be specifically stated so that the assessee would have the oppor tunity 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 the 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 the 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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eproduced below (page 5 of 392 ITR) : "3. The impugned order of the Tribunal deleted the penalty imposed upon the respondent-assessee. This by holding that the initiation of penalty under section 271(1)(c) of the Act by the Assess ing Officer was for furnishing inaccurate particulars of income while the order imposing penalty is for concealment of income. The impugned order holds that the concealment of income and furnishing inaccurate particulars of income carry different connotations. There fore, the Assessing Officer should be clear as to which of the two limbs under which penalty is imposable, has been contravened or indicate that both have been contravened while initiating penalty proceedings. It cannot be that the initiation would be only on one limb, i. e., for furnishing inaccurate particulars of income while imposition of penalty on the other limb, i.e., concealment of income. Further, the Tribunal also noted that notice issued under section 274 of the Act is in a standard pro forma, without having striked out irrelevant clauses therein. This indicates non-application of mind on the part of the Assessing Officer while issuing the penalty notice. 4. The im....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the two breaches mentioned under section 271(1)(c) of the Act, for initiation of penalty proceedings will not warrant/permit penalty being imposed for the other breach. This is more so, as an assessee would respond to the ground on which the penalty has been initi ated/notice issued. It must, therefore, follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the assessee has no notice. 7. Therefore, the issue herein stands concluded in favour of the respondent-assessee by the decision of the Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (supra). Nothing has been shown to us in the present facts which would warrant our taking a view different from the Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (supra)." 10. In view of the above judicial precedents, I find merit in the arguments of the learned authorised representative that the penalty orders are not sustainable, as the Assessing Officer had initiated penally on one limb of section 271(1)(c) and had imposed penalty on another limb of section ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s been disclosed. During the course of the assessment proceedings the learned counsel for the assessee could not produce books of account or vouchers in spite of number of opportunities provided to him. Accordingly, the learned counsel for the assessee was confronted with the above details and was asked to state as to why the trading results may not be rejected. In response, the learned counsel relied upon the gross profit shown in the balance-sheet. He stated that the trading account was as per the actual books of account which could not be produced by the assessee as the same were not traceable. The plea taken by the learned counsel for the assessee is not acceptable. If trading results are of the assessee are not backed by any record maintained during the regular course of business conducted by him the same cannot be relied upon. Accord ingly in view of these facts, the trading results are not relied upon and hence rejected. In order to verify the sales of the assessee, information was called from the Commercial Tax Officer, Circle-H, Jammu where the asses see is assessed to commercial tax. As per the order under section 7(9) of the Jammu and Kashmir General Sales tax A....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "2. During the course of assessment proceedings it was observed that the assessee has shown the total turnover as per the return filed in response to the notice under section 148 on November 30, 2010 at Rs. 79,56,865. As per copy of assessment order passed by the assess ing authority, Sales Tax, Circle-H, Jammu dated March 25, 2010 the taxable turnover of the assessee has been assessed at Rs. 93,32,486 with the following observations by the above authority. '. . . . Since the dealer has filed three trading accounts, out of which two audited by the concerned chartered accountant and has also filed two purchase statements, two brand-wise sale statements which clearly indicate that dealer has not maintained any books of account. Dealer has furnished the belowmentioned audited-unau dited trading account which shows the following sale position : Unaudited Audited Audited Opening stock 6,85,468 6,85,468 6,85,468 Purchase 77,07,047 77,07,047 85,34,039 Sales 82,14,132 79,56,865 92,89,233.92 Closing stock 10,50,593 12,68,120 86,96,94 Hence, the returns and trading account filed by the dealer wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....early shows that the assessee has no arguments in support of his case. This fact is again confirmed from the records as the assessee has not preferred by appeal against the order passed. 5. In view of the above facts the assessee has deliberately furnished inaccurate particulars of its income and is covered under the mischief of section 271(1)(c) of the Income-tax Act, 1961. Accordingly, a penalty of Rs. 4,57,300 under section 271(1)(c) at 100 per cent. of tax evaded is hereby imposed which is worked out as under : Tax on income returned at Rs. 1,79,630 Rs. 12,260 Tax on income assessed at Rs. 15,61,641 Rs. 4,69,548 Tax sought to be evades on income of Rs. 13,82,011 Rs. 4,57,288 Therefore, penalty imposed at 100 per cent. of tax sought to be evaded Rs. 4,57,300. Thus penalty of Rs. 4,57,300 (rupees four lakhs fifty-seven thou sands and seven hundreds only) is imposed in this case" 14. Feeling aggrieved against the penalty order, the assessee preferred the first appeal before the Commissioner of Income-tax (Appeals) and the learned Commissioner of Income-tax (Appeals) while confirming the penalty order observed that merely by writing f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y furnishing inaccurate particulars of income. The appellant has also taken a plea that notices for levying penalty were generalised and in a standard proforma without striking out irrelevant clauses. The appellant has further stated that mere rejection of rectification application cannot be the ground for imposition of penalty. It was further added that no legal satisfaction was drawn by the Joint Commissioner before according approval to the penalty orders and approval on the same date of proposal shows that it was mechanical and without application of mind. I have considered the rival arguments. The appellant is taking shelters under technicalities rather than placing its case on the merits. If the Assessing Officer has drawn satisfaction for concealing partic ulars of income and justifies its case in the body of order, then merely by writing furnishing of inaccurate particulars of income instead of concealing the particulars of income shall not vitiate the order. It is true that the Assessing Officer has found differences in the turnover declared before him in the returns in response to the notice under section 148 vis-a-vis what was furnished before the Commercial Tax....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ative further relied on the judgment passed by the Andhra Pradesh High Court in the case of CIT v. Chandulal [1985] 152 ITR 238 (AP) and submitted that initiation of notice under section 274 is merely an administrative devise to put the assessee in the awareness and knowledge of the initiation of the penalty proceedings and so long as this purpose accomplished by the issuance of a notice, does not become invalid on account of either inappropriate portions of the notice not being struck off or on account of in appropriate income. 19. The learned Departmental representative further relied upon the judgment passed by the Gujarat High Court in the case of DIT (Exemptions) v. Shia Dawoodi Bohra Jamat [2012] 344 ITR 653 (Guj) and emphasised that the decision of the courts are not to be applied in the extract but are to be applied to the facts of the case and each case is an individual and distinguish and having its own unique features, therefore, no straitjacket formula can be applied while applying the judgments of the Higher Courts. 20. Let us first deal with contentions raised by the assessee as the assessee has heavily relied upon the judgment by the apex court in the case of C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the conditions mentioned in section 271 should be made known about the grounds on which they intend imposing penalty on him as section 274 makes it clear that the 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(1)(c) do not exist as such he is not liable to pay penalty. The practice of the Department sending a printed form where all the grounds mentioned in section 271 are mentioned would not satisfy the 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 per cent. to 300 per cent. of the tax liability. As the said provisions have to be held to be strictly construed, notice issued under section 274 should satisfy the grounds which he has to meet specifically. Otherwise, the principles of natural justice is offended if the show-cause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee." 22. On the contrary, the Larger Bench of the apex court in K. P. Madhusudhanan v. CIT (supra) had clearly held that no express invocat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ome-tax Officer under section 274. If the assessee was under a mistaken view about the real intent and effect of the notice issued, he could have asked the Income-tax Officer to clarify whether the penalty proceedings were initiated for concealment of income or for furnishing inaccurate particulars of such income. In the present case, it is not denied that in the explanation given to the Income-tax Officer in response to the notice issued under section 274, the assessee did not raise any objec tion on the ground that the notice did not convey the nature of offence committed by him. No objection was also taken regarding the validity of the notice on that ground. It is, therefore, clear that the assessee was not under any misapprehension about the offence alleged against him. There was proper understanding and indeed, in the explanation filed, the assessee dealt with the reasons for contending that no penalty could be levied under section 271(1)(c). It was not shown to us that any prejudice was caused to the assessee on account of the assessee not being put in the knowledge of the nature of offence committed by him. The contention regarding the validity of the notice was urged only d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, we uphold the Revenue's plea that the notice issued under section 274 of the Income-tax Act, in the present case, is perfectly valid and the order of penalty did not suffer from any legal infirmity." 24. The contention of the learned authorised representative to the effect that controversy has been settled by the apex court in the case of CIT v. SSA's Emerald Meadows [2016] 386 ITR (St.) 13 (SC) qua quashing of penalty does not sound good because the apex court simply rejected the special leave to petition without laying any ratio. As it was clarified in the case of Kunhayammed v. State of Kerala on July 19, 2000- [2000] 245 ITR 360 (SC) by the hon'ble apex court that an order refusing special leave to appeal does not stand substituted in place of the order under challenge. 25. The relevant part of the judgment is reproduced hereinbelow for the sake of brevity and convenience (page 369 of 245 ITR) : "Thus, a petition seeking grant of special leave to appeal and the appeal itself, though both are dealt with by article 136 of the Constitution, are two clearly distinct stages. In our opinion, the legal position which emerges is as under : 1.While....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... can be said to have been decided by the court is that it was not a fit case where special leave should be granted. That may be due to various reasons. During the course of the judgment, their Lordships have observed that dismissal of a special leave petition under article 136 against the order of a Tribunal did not necessarily bar the entertainment of a writ petition under article 226 against the order of the Tribunal. The decision of the Madras High Court in Management of Western India Match Co. Ltd. v. Industrial Tribunal, AIR 1958 Mad 398, 403, was cited before their Lordships. The High Court had taken the view that the right to apply for leave to appeal to the Supreme Court under article 136, if it could be called a 'right' at all cannot be equated to a right to appeal and that a High Court could not refuse to entertain an application under article 226 of the Constitution on the ground that the aggrieved party could move the Supreme Court under article 136 of the Constitution. Their Lordships observed that such a broad statement of law is not quite accurate, although substantially it is correct. . . . To sum up our conclusions are : (i) Where an appea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t, tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the apex court of the country. But, this does not amount to saying that the order of the court, tribunal or authority below has stood merged in the order of the Supreme Court rejecting the special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties. (vi) Once leave to appeal has been granted and the appellate jurisdiction of the Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation. (vii) On an appeal having been preferred or a petition seeking leave to appeal having been converted into an appeal before the Supreme Court the jurisdiction of the High Court to entertain a review petition is lost thereafter as provided by sub-rule (1) of rule 1 of Order 47 of the Code of Civil Procedure." 26. Even, the Gujarat High Court in the case of DIT v. Shia Dawoodi Bohra Jamat [2012] 344 ITR 653 (Guj) ; [2010-TIOL-283-HC-AHM-IT] clearly held that : "Decisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndependent mind to the facts and circumstances of the case and dealt with the grounds of appeal as well as the submissions of the appellant and confirmed the order passed by the Assessing Officer by dealing with individual contentions. It is a matter of fact that the Assessing Officer has rejected the application under section 154 in the absence of evidence and the assessee did not prefer any appeals against the said orders, thereafter, only the Assessing Officer proceeded to levy penalty for furnishing inaccurate particulars of income after taking prior approval of the Joint Commissioner of Income-tax. It is also clear from the order passed by the learned Commissioner of Income-tax (Appeals) that the Assessing Officer recorded satisfaction in the assessment order and dealt with the objection of the assessee to the effect that notice under section 271(1)(c) was invalid because that was issued for concealment of income whereas the penalty order has been passed for furnishing inaccurate particulars. The learned Commissioner of Income-tax (Appeals) rightly concluded that the Assessing Officer justified its case in the body of order merely by writing furnishing of inaccurate particular....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the case for adjudication of the issues on the merits as it clearly reflects from the estimation order as well as the penalty order that the assessee has shown less amount than as shown before the Commercial Tax Officer and the Assessing Officer discovered from the assessment order of the sales tax authorities that the assessee had shown more turnover than the turnover shown before the Assessing Officer and on being confrontation and query to explain, the assessee requested for rectification under section 154 for the correction of the figure, however, the same was rejected in the absence of evidence. On consideration cases titled ITO v. Ashok Kumar (I. T. A. No. 571(Asr)/2011 dated August 6, 2012) and ITO v. Age Construction Pvt. Ltd. (I. T. A. No. 293(Asr)/2013 dated March 4, 2016) and International Engineers v. Asst. CIT (I. T. A. No. 165(Asr)/2016 darted July 12, 2016) as relied upon by the learned authorised representative, we realize that all the cases are factually distinguishable to the instant case because in the said cases, belated revised return, revised return levy to estimation and adjust ment in sale were in question but in the instant case, the facts are to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....swered by a Third Member. (1) Whether levy of penalty under section 271(1)(c) is sustainable in a case where the satisfaction of the Assessing Officer while initi ating penalty proceedings under section 271(1)(c) of the Income-tax Act is with regard to concealing the particulars of income and the imposition of the penalty is for furnishing inaccurate particulars of income. (2) Whether the reliance placed by the hon'ble Judicial Member on the decision of the hon'ble Supreme Court in the case of K. P. Madhusudhanan v. CIT is misplaced, in view of the hon'ble Andhra Pradesh High Court judgment in I. T. A. No. 684 wherein the hon'ble Andhra Pradesh High Court has held that the case law of K. P. Madhusudhanan has no application to the Karnataka High Court decision in the case of Manjunatha Cotton and Ginning Factory. N. K. Choudhry (Judicial Member).-In the above referred to cases, the Members constituting the Bench have taken divergent views while deciding the aforesaid appeals, therefore, I propose the following questions to be referred to the hon'ble President, Income-tax Appellate Tribunal for nominating the Third Member for adjudicatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he penalty in the proceedings under section 271(1)(c) initiated for the concealment of particulars of income, does not vitiate the entire penalty proceedings. ORDER OF THIRD MEMBER Smt. Diva Singh (Judicial Member).-In the present appeals filed by the assessee the hon'ble President in order to resolve the point of dispute amongst the Members has referred under section 255(4) of the Income-tax Act, 1961 the following questions framed by the learned Members respec tively : Questions of Accountant Member (1) Whether levy of penalty under section 271(1)(c) is sustainable in a case where the satisfaction of the Assessing Officer while initi ating penalty proceedings under section 271(1)(c) of the Income-tax Act is with regard to concealing the particulars of income and the imposition of the penalty is for furnishing inaccurate particular of income. (2) Whether the reliance placed by the hon'ble Judicial Member on the decision of the hon'ble Supreme Court in the case of K. P. Madhusudhanan v. CIT [2001] 251 ITR 99 (SC) is misplaced, in view of the hon'ble Andhra Pradesh High Court judgment in I. T. A. No. 684 wherein the hon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d on the view that similarly in view of the judgment rendered by the apex court in the case of K. P. Madhusudhanan v. CIT, by mere writing words "furnishing inaccurate particulars of income" while imposing the penalty in the proceedings under section 271(1)(c) initiated for the concealment of particulars of income, does not vitiate the entire penalty proceedings. 38. The questions posed above are in the context of the area of dissent which is best highlighted from the following finding of the learned Judicial Member which has formed the basis of the point of dispute amongst the Members on which the dissent is addressed : ". . . From the conjoint reading of the judgments mid applying the facts to the instant case, we are of the considered view that simply not striking off of the inappropriate portions in the notice does not vitiate the under section 271(1)(c) of the Act as invalid. Further, simply by issuing a proceedings for one limb of section 271(1)(c), does not take away the power of the Assessing Officer to pass an order on other limb of the section, the entire provisions cannot be quashed simply on the technical lapses until and unless the same have resulted into f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction 271(1)(c) was invalid because that was issued for concealment of income whereas the penalty order has been passed for furnishing inac curate particulars. The learned Commissioner of Income-tax (Appeals) rightly concluded that the Assessing Officer justified its case in the body of the order merely by writing furnishing of inaccurate particulars of income instead of concealing the particulars of income shall not vitiate the order. Therefore we do not have any hesitation to hold that simply by writing in the order furnishing of inaccurate particulars of income instead of concealment of particulars of income does not vitiate the notice invalid and proceedings cannot be quashed. (emphasis supplied) 39. It is not disputed that the dissent has been authored only addressing the aforesaid conclusion. The basic facts germane to the issue as is evident on a reading of the lead order to be examined by me as the Third Member, is that the notice was issued for concealment while the penalty has been imposed for furnishing of inaccurate particulars. In the facts of the present case as is evident on a reading of the lead order, it is not an issue to be examined by the Third Membe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....th the parties have been heard. The learned authorised representative placing reliance upon the decisions cited in the dissenting order submitted that the decision of the Third Member in the case of HFCL Mittal Energy v. Dy. CIT [2018] 195 TTJ 1 (Asr) (TM) recently rendered of the Amritsar Bench itself fully addresses the controversy. 41. The learned Commissioner of Income-tax-Departmental representative on the other hand, submitted that in the facts of the present case, the penally can justifiably be levied both on the counts of furnishing of inaccurate particulars as well as on the count of concealment. Referring to the facts of the present case from the assessment order, it was his submission that the total turnover provided by the assessee to the Assessing Officer, admittedly was incorrect and it was ultimately revised two to three times and it has been the subject matter of addition, thus, in these facts, the assessee could not be said to have suffered from any confusion as to what he was required to explain in the penalty proceedings and thus, since both the limbs of the section are attracted, the fact that notice has been issued on one count and levy of penalty has been o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he parties to the opportunity of being heard, pass such orders thereon as it thinks fit." 44.1. A perusal of the same would show that the statute mandates that the Income-tax Appellate Tribunal may after giving both the parties to the appeal an opportunity of being heard pass such orders thereon as it thinks fit. The said provision has been a subject matter of much judicial debate right from the decision of the apex court in the case of ITO v. M. K. Mohammed Kunhi [1969] 71 ITR 815 (SC) onwards. However, for the purposes of the present proceedings, it may be sufficient to note that by the statutory mandate under section 254(1) it is well settled that the entire canvass is open before the Income-tax Appellate Tribunal to pass appro priate orders in order to discharge its statutory functions. In other words, there are no limitations for attaining the statutory aims and objects under section 254(1) of the Act and the complete 365 degrees of the compass are available for achieving the statutory aims. However, when the specific provisions by which the present proceedings are to be guided is concerned, the statutory limitations are unambiguous. For ready reference, the relevant ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....clear terms addresses the issue (page 314) : "Admittedly, in this case, the President of the Appellate Tribunal has referred the matter to the third Member (Thiru D. Rangaswamy) to hear on the point or points on which the two members of the Tribunal had differed and on the Third Member giving his decision on the point or points referred to it, the appeal should be taken to have been decided by the opinion of the majority of the members of the Appellate Tribunal who have heard the case including those who first heard it. Thus, the power of the Third Member to whom the case is referred is confined to giving of a decision on the point on which the members had differed and which has been formulated by them as a question for the decision of a Third Member. In this case, the Third Member has proceeded on the basis that the question referred by the two Members of the Tribunal is wide enough to enable the assessee to raise additional points and, therefore, the additional points pressed by the assessee should be considered. Even so, we are of the view that the Third Member should have pronounced his opinion on the point of difference as also on the additional points raised....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ved by the various statutory provisions. In this case, the Third Member has not chosen to give his opinion one way or the other either on the point of dispute, i. e., on the mode of computation of the capital gains or on the new points urged by the assessee before him. If the Third Member has enter tained the new points and has given his opinion one way or the other, as also on the point of dispute referred to it, it can be said that he has acted within his jurisdiction, though it may be open to the Revenue to contend before the appropriate forum that the Third Member should not have entertained the new points which were not urged before the two Members of the original Tribunal. In this case, as already stated, without giving his decision on any of the points, the Third Member has merely remitted the matter to the two members of the Tribunal for a fresh consideration on all the points. We do not see how the Third Member to whom the point of dispute is referred under section 255(4) can claim to have any larger power than the two Members who originally constituted the Tribunal. The Third Member has no higher power or jurisdiction than the Members who originally constituted the Tribun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....jority opinion of Members in the light of section 255(4) of the Income-tax Act, 1961 (hereinafter referred to as the 'Act, 1961') and consequently heard the matter and decided the appeals by means of impugned judgment dated May 31, 2005 taking its own view." 44.4 A perusal of fee said decision further shows that their Lordships considering the statutory provisions namely sub-section (4) of section 255 of the Act very categorically held that after the opinion of the referred Bench the Third Member had to decide the questions posed and is not required to look into the correctness of the decision of the two differing Members and observe that they have not looked into the relevant circum stances and thus should re-decide the ground of appeal after giving oppor tunity to both the sides. Their Lordships in categoric terms criticizing the Third Member observed that it appears that the Third Member forgot his position that he was not sitting in appeal over the opinion rendered by the two Members of Tribunal. Noting the fact that the jurisdiction of the Third Member was co-ordinate, the court observed that it was the duty of the Third Member to hear the two sides and decide....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ues and requiring re-hearing of appeals of the assessee/Department as well as cross-objection on the points of difference. The awkward situation in which the Regular Bench was placed by strange order passed by the Third Member is writ large from what has been said in para. 9 of order dated December 31, 2003, which reads as under : '9. This is one of the rarest cases in which the Bench is unable to pass final order under section 255(4) of the Act. We are supposed to pass the final order as per majority but we are having three orders out of which the two initial orders are of Members, which constituted the Bench and naturally both of them were having their reservations/ differences on some points, which were ultimately referred to the hon'ble Senior Vice-President, but facts remain that the hon'ble Senior Vice-President, the Third Member instead of agreeing with either of the Member, who passed the dissenting order had reopened the same issues afresh implying the fresh disposal of the appeals by this Bench. Under these circumstances, this order under section 255(4) of the Act is passed to the effect that appeals of the assessee/ Department as well as cross-object....
X X X X Extracts X X X X
X X X X Extracts X X X X
....] 396 ITR 538 (Karn) and the decisions of the various High Courts specifically Gujarat High Court in the recent case of Nayan C. Shah v. ITO [2016] 386 ITR 304 (Guj) and earlier decisions in the cases of New Sorathia Engineering Co. v. CIT [2006] 282 ITR 642 (Guj) and CIT v. Manu Engineering Works [1980] 122 ITR 306 (Guj) ; the decision in the case of CIT v. Samson Perinchery [2017] 392 ITR 4 (Bom) of the Bombay High Court and of the hon'ble Andhra Pradesh High Court in the case of Smt. Baisetty Revathi [2017] 398 ITR 88 (T&AP) amongst others including the Allahabad High Court in the case of CIT v. Sewak Ice and Cold Storage P. Ltd. [2014] 369 ITR 316 (All) and also in the case of CIT v. Dee Control and Electric P. Ltd. [2017] 100 CCH 185 (All) also of the Allahabad High Court ; Rajasthan High Court in the case of Sheveta Construction Co. v. CIT dated December 6, 2016 are some of the various decisions available in favour of the assessee. Amongst all these decisions available on the legal issue in favour of the assessee, the sole contrary view referred to by the Revenue is the decision of the hon'ble Andhra Pradesh High Court in the case of CIT v. Chandulal [1985] 152 ITR 23....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... inaccurate particulars' are different. Both concealment and furnishing inaccurate particulars refer to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi. Although it may not be very accurate or apt but suppressio veri would amount to concealment, suggestio falsi would amount to furnishing of inaccurate particulars." 45.2 A perusal of the said decision would show that their Lordships go on to observe that the Assessing Officer himself was not sure whether he had proceeded on the basis of concealment of income or furnishing of inaccurate particulars of income and in those circumstances where it is subsequently argued that the Assessing Officer had dealt with both situations, the order in the circumstance was held to suffer from non-appli cation of mind. The said argument advanced in the present proceedings accordingly, fully applies to the present case also. The relevant extract from the aforesaid decision is reproduced hereunder (page 555 of 291 ITR) : "95. It is of some significance that in the standard pro forma used by the Assessing Officer in issuing a notice desp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stice. It was pointed out that section 271 makes appropriate provision for levying penalties on an assessee in different eventualities and one such eventuality is for concealment of income or furnishing of inac curate particulars of such income. It was held that for starting the penalty proceedings, the condition precedent is that the Assessing Officer must be satisfied that a person has either concealed particulars of his income or furnished inaccurate particulars of such income. The person who is accused of the conditions mentioned in section 271 should be made aware of the grounds on which imposition of penalty is proposed as he has a right to contest such proceedings and should have a full opportunity to meet the case of the Revenue so as to show that the conditions stipulated in section 271(1)(c) do not exist and that he is not liable to pay the penalty. It was further held that the practice of the Revenue in sending a printed form where all the grounds mentioned in section 271 are mentioned would not satisfy the requirement of law when the consequence of the assessee not rebutting the initial presumption is serious in nature and he has to pay a penalty ranging from 100 per ce....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e as to whether she is to be penalised for conceal ment of particulars of income or for furnishing inaccurate particulars of income. These are two different acts. Concealment of income is an act of omission while furnishing of inaccurate particulars of income is an act of commission. The consequences of such acts, being penal in nature, an assessee has to be informed as to what exactly is the charge against him so that he may respond thereto. 15. No doubt, in the present case, the assessee seems to have submitted her explanation on the merits without raising a doubt as to what was the precise allegation levelled against her. However, we are more concerned with the principle involved and not just the isolated case of its application against the assessee. Further, the penalty order demonstrates that the Assessing Officer was not even certain as to what was the finding on the strength of which he imposed the penalty. This is clear from the fact that the Assessing Officer recorded that he was satisfied that the assessee had concealed/furnished inac curate particulars of income. In the absence of a clear finding by the Assessing Officer himself, the benefit of doubt cannot be g....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o the charge of non-application of mind has not been given a go by. The following observations of their Lordships fully supports the conclusion: "No doubt, there can exist a case where vagueness and ambiguity in the notice can demonstrate non-application of mind by the author ity and/or ultimate prejudice to the right of opportunity of hearing contemplated under section 274." 46.1 The decision of the hon'ble Madras High Court in the case of Sundaram Finance Ltd. it is seen is also a very fact specific decision as the subject matter of the penalty therein was the addition made on account of withdrawal of depreciation on an asset which was ultimately accepted to be not in existence by the assessee. Even otherwise, in the absence of a binding jurisdictional High Court's decision on the specific point, thus considering the position of law where two views are possible relying upon the decision of the apex court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC), the issue is decided in favour of the assessee as it is well settled that when two views are available, the view in favour of the assessee cannot be discarded. The said principle acqui....