2020 (3) TMI 1404

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....of the case are that the assessee is a Chartered Accountant firm and had shown income under the heads income from profession and short term capital gains. For the assessment year 2007-08, they filed return of income on 11.11.2007 showing Profit and gains of business amounting to Rs 4,98,90,093/- and Short term capital gain of Rs 10,87,868/-. The Profit and Gain of business amounting to Rs 4,98,90,093/- was adjusted against brought forward losses from the earlier years and therefore total income was returned at Rs 10,87,868/- being short term capital gains. Brought forward losses claimed in the returned income amounted to Rs. 5,38,53,703. However, the losses set- off from Profit and Gain of business amounted to Rs 4,98,90,093/- and those car....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... by issuing notice u/s. 274 read with section 271 of the Act on 20.09.2012 and being not satisfied with the submissions of the assessee, imposed a penalty of Rs.48,93,726/- u/s. 271(1)(c) of the Act. 3. Aggrieved by such penalty, assessee preferred appeal before the Ld. CIT(A) and contended that no penalty was warranted as the assessee made a claim under a bona fide belief and all the relevant facts were disclosed in ITR and financial statements of the assessee company. CIT(A), however, partly allowed the appeal of the assessee by deleting the penalty only on the addition of Rs.75,978/- made on account of payment to one of its clients, AF Ferguson & Co. Aggrieved, the assessee is in appeal before us. 4. Ld. AR submitted at the outset ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....een from the assessment order that the learned Assessing Officer proposed the proceedings under section 271(1)(c) of the Act for concealing the particulars of income and furnishing of inaccurate particulars thereof. When it came to the notice issued under section 274 read with section 271 of the Act, such a notice does not specify whether it is for concealment of income or for furnishing of inaccurate particulars thereof, against which the assessee had to defend itself. Order under section 271(1)(c) of the Act narrates that the penalty was leviable under section 271(1)( c ) of the Act for concealment of income and furnishing of inaccurate particulars thereof. In this fact situation we shall refer to the decisions relied upon by the Ld. AR. ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....mposing 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." 8. In Commissioner of Income Tax v. SSA'....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ccordingly dismissed." 10. The Special Leave Petition filed by the Revenue challenging the aforesaid judgement of the High Court was dismissed by the Hon'ble Supreme Court holding: "We do not find any merit in this petition. The special leave petition is, accordingly, dismissed." 11. In PCIT vs. Sahara India Life Insurance Company Limited case ITA No 475/2019 and batch order dated 02/08/2019, Hon'ble Delhi High Court, upheld the view taken by the Tribunal basing on the decision of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (supra) and SSA's Emerald Meadows (supra) wherein it was held that the notice issued by the learned Assessing Officer would be bad in law if it did....