2023 (1) TMI 222

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....13-14. 2. In the instant case, the Assessing Officer initiated the penalty proceedings against the Assessee u/s. 271(1)(c) of the Act on the basis of addition of Rs.1,60,17,297/- on account of disallowance of sundry balances written off, made by the Assessing Officer vide assessment order dated 07.03.2016 u/s. 143(3) of the Act. 2.1 The Assessing Officer, therefore, after giving show cause notices 07-03-2006, 16-08-2016, 09-09-2016 and 18-03-2019 (Pages no 87-90 of PB) and resorting to the provisions of section 271(1)(c) of the Act, imposed a penalty of Rs.52,22,411/- vide order dated 30.03.2019. 2.2 The Assessee being aggrieved, preferred first appeal before the ld. Commissioner, who vide impugned order affirmed the levy of penalt....

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....ide the legal issue involved in the instant case first, before dwelling into the merits of the case. 6. The Hon'ble Apex Court in case of M/s. SSA's Emerald Meadows, (2016) 73 taxmann.com 248(SC) dismissed the Special Leave Petition filed by the Revenue against the judgment rendered by Hon'ble High Court of Karnataka whereby identical issue was decided in favour of the Assessee. Operative part of the judgment in case of M/s. SSA's Emerald Meadows (supra) decided by Hon'ble High Court of Karnataka is reproduced below:- "2. This appeal has been filed raising the following substantial questions of law: (1) Whether, omission if assessing officer to explicitly mention that penalty proceedings are being in....

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....g the appeal of the Assessee, has relied upon the decision of the Division Bench of this Court rendered In the case of COMMISSIONER or INCOME TAX -VS MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court, the appeal is accordingly dismissed." 6.1 The Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory, 359 ITR 565 (Kar) observed where the Assessing Officer proposed to invoke first limb being concealment, then the notice has to be appropriately marked. The Hon'ble High Court also held that the....

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....e, set-aside the order of the CIT(A) and direct the Assessing Officer to cancel the penalty so levied." 6.3 The penalty provisions of section 271(1)(c) of the Act are attracted, where the Assessee has concealed the particulars of income or furnished inaccurate particulars of such income. It is also a well-accepted proposition that the aforesaid two limbs of section 271(1)(c) of the Act carry different meanings. Therefore, it is imperative for the Assessing Officer to specify the relevant limb so as to make the Assessee aware as to what is the charge made against him, so that he can respond accordingly. 6.4 In the background of the aforesaid legal position and, having regard to the manner in which the Assessing Officer has issued the n....