TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 94
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....Japanwala Jewellers P. Ltd. and holding 44% shares in Suram Holding P. Ltd. and also is director in both companies. M/s Japanwala Jewellers P. Ltd., (JJPL) during the year made payment of Rs. 23,00,000/- to M/s Suram Holding P. Ltd. (SHPL) as share application money which was shown by JJPL in audited accounts under the head advances recoverable as share application money and SHPL shown the same in audited accounts as share application money. Accordingly, the A.O. made addition U/s 2(22)(e) of the Act amounting to Rs. 17.69 lacs. In the quantum appeal, the ld. CIT(A) restricted the addition to the extent of Rs. 10,12,000/-. The A.O. levied penalty with respect to addition upheld by the ld. CIT(A) U/s 271(1)(c) of the Act amounting to Rs. 3,40,640/-. By the impugned order, the ld. CIT(A) has confirmed the action of the A.O. both on the legality of issue of notice U/s 274 r.w.s. 271(1)(c) of the Act as well as on merits, against which the assessee is in further appeal before the ITAT. 3. Before the ITAT, the assessee has taken following additional ground: "That the A.O.is wrong and bad in law inasmuch as the notice issued by the A.O. U/s 274 r.w.s. 271(1)(c) of the IT Act, 1961 to ....
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....e various judicial pronouncements. The ld AR contended that no penalty should be imposed in so far as there was variation in the allegation made in the notice issued U/s 274 vis a vis penalty order passed U/s 271(1)(c) of the Act. 8. As per the ld AR, it is apparent from assessment order and/or penalty notice(s) that the A.O. neither in assessment order nor in penalty notice issued by him has clearly mentioned the limb, on which basis the impugned penalty has been imposed. As verifiable from the record that the AO has simply issued a pre-printed notice without striking off the unnecessary portions of the notice. If the A.O. was of the view that the assessee has concealed the income or furnishing inaccurate particulars of income then he should have deleted or not mentioned the other limb for imposition of penalty i.e. concealing the particulars of income. The above act of the A.O. clearly shows that the entire exercise of initiation of penalty proceedings has been done without application of mind. 9. On merits, it was also contended that no penalty should be levied in respect of addition made on the deemed income and not on the actual income. More so when part of the deemed additi....
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....ice as well as on merits penalty so levied was not justified. 12. On the other hand, the ld DR has relied on the orders of the lower authorities and contended that the mere fact that the penalty notice does not mention the reason for initiation of penalty proceedings cannot be a reason for invalidating the penalty proceedings, if the reasons for initiating the penalty are discernible from the assessment order. As per the ld DR, in the instant case under consideration, in the assessment order, the A.O. has initiated penalty proceedings U/s 271(1)(c) of the Act for furnishing of inaccurate particulars of income. It is further noted from the impugned penalty order under consideration that the penalty was also imposed for furnishing of inaccurate particulars of income. With regards to merit, he argued that it is an undisputed fact that the assesse was a director in Japanwala Jewellers P Ltd. (JPPL) and Suram Holdings P Ltd. (SHPL and was holding more than 20% of the share capital of both of these companies. Thus, being a director in both the companies i.e. the payer and the payee company, it cannot be said that it was not aware of the transactions for which penalty was levied. Further....
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....ara 3, the Hon'ble High Court has observed as under: Para "3. If the Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under section 274 read with Section 271 (1) (c) of the Income Tax Act, 1961 (for short 'the Act') to be bad in law as it did not specify which limb of Section 271 (1) (c) of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX - VS - MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. In our view, since the matter is covered by judgement of the Division Bench of this Court, we are of the opinion, no substantial question of law arised in this appeal for determination by this Court. The appeal is accordingly dismissed." 14. Moreover, the SLP filed by the I.T. department before the Hon'ble Supreme Court has been dismissed. Therefore, Hon'ble Supreme Court has approved the findings made by Hon'ble Karnataka High Court in th....