TaxTMI 
TaxTMI 
2023 (2) TMI 251
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....Act"), pertaining to the assessment year 2001-02. 2. In the instant case the Assessee by filing its return of income on 31.10.2001 declared an income of Rs. 13,32,019/- which was selected for scrutiny and during the assessment proceedings the AO observed that by virtue of acquisition agreement dated 16.02.2000, the Assessee has transferred its business of software development to M/s Suri Capital and leasing Ltd. in lieu of 45 lakh shares of face value of Rs. 10 each. The Assessee furnished an agreement of transfer of software business, as per Article 3 of which the Assessee himself admitted that this is a slump sale. Consequently the AO treated the transaction as slump sale under the provisions of Section 50B of the Act and accordingly c....
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....Assessee being aggrieved challenged the said penalty before the learned Commissioner, who vide impugned order, affirmed the levy of penalty of Rs. 1,19,85,719/- which is under challenge before us. 7. The Assessee by raising ground no. 1 claimed that on the facts and circumstances of the case and in law, the learned CIT(A) erred in not appreciating that notice issued u/s 274 read with Section 271(1)(c) of the Act was bad in law as it was in standard proforma without specifying the default for which the Assessee is charged under section 271(1)(c) of the Act. Levy of penalty on the basis of Notice which does not meet the requirement of law, is illegal and is liable to be deleted. 8. At the outset it was argued by the learned counsel for ....
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....'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 initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the Assessee had concealed income in the facts and circumstances of the case? (2 Whether, on the facts ....
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....s 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." 12. 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 standard proforma of notice under section 274 of the Act without striking of the irrelevant clause would lead to an inference of non-application of mind by the Assessing Officer and levy of penalty would suffers from non-application of mind. 13. Even the Hon'ble High Court of Delhi in the case of....
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....o 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. 15. In the background of the aforesaid legal position and, having regard to the manner in which the Assessing Officer has issued the notice referred above under section 274 r.w.s. 271(1)(c) of the Act without specifying the limb under which the penalty proceeding has been initiated and proceeded with, apparently goes to prove that notice in this case has been issued in a stereotyped manner without applying mind which are bad in law,....