TaxTMI 
TaxTMI 
2018 (4) TMI 2039
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....nder the facts and circumstances of the case the learned CIT(A) has erred in confirming the penalty of Rs. 13,61,173/- u/s 271(1)(c)/154 of the Income Tax Act, 1961 without considering the submission of the assessee. 4. Under the facts and circumstances of the case the learned CIT(A) has erred in deciding the appeal of the assessee without considering the adjournment applications and submissions filed by the AR of the assessee. 5. The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing." The assessee has also raised the additional grounds as under:- "1. Under the facts and circumstances of the case the Learned CIT (A) has erred in confirming the order of the Learned. Assessing Officer u/s 271(1)(c) of the Income Tax Act on the basis of notice dated 29.03.2014 which is void-ab initio and issued without application of mind by the Learned A.O. without striking off the irrelevant portion of the printed show cause notice viz., "furnished inaccurate particulars of income" or "concealed particulars of such income" is bad in law." 2. Under the facts and circumstances of the case the Learn....
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.... first time before the Tribunal provided the relevant material for deciding the question is already existed on record and no further investigation of facts is required. Hence, the ld. AR has submitted that when the additional grounds raised by the assessee is purely legal in nature and does not require any fresh investigation of facts and also goes to the root of the matter then, the same may be admitted for adjudication on the merits. 3. On the other hands, the ld. DR has raised strong objection against the admission of additional ground and submitted that the assessee was given sufficient opportunity by the AO in the penalty proceedings as well as by the ld. CIT(A) in the first appellate proceedings but the assessee did not raise such objection against the validity of notice issued u/s 274 of the Act. The ld. DR has further contended that in the absence of disclosing a reasonable cause which has prevented the assessee from raising such ground before the authorities below the additional ground raise at this stage cannot be accepted. 4. We have considered the rival submissions as well as relevant material on record. We note that the assessee has raised a legal issue in the ad....
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..... SSA's Emerald Meadows 242 taxman 150. The ld. AR has also relied upon a series of decisions on this point and submitted that the Tribunal has held that a defective notice which has not spelt out specifically the grounds on which the penalty was sought to be levied is not a curable defect and therefore, the consequential penalty levied u/s 271(1)(c) of the Act is not sustainable and liable to be deleted. The ld. AR has further submitted that the Hon'ble jurisdictional High Court Sheveta Construction Company Pvt. Ltd vs. ITO vide decision dated 06.12.2016 in DB ITA No. 534/2008 has also decided this issue in favour of the assessee and against the Revenue. 6. On the other hand, ld. DR has relied upon the orders of the authorities below and submitted that when the addition was made by the AO u/s 69 of the IT Act on account of excess stock then the nature of default is already stated in the assessment order. The Assessing Officer has also recorded a satisfaction for initiation of penalty u/s 271(1)(c) of the Act. Hence, there is no defect in the notice issued u/s 274 of the Act. The ld. DR has further contended that the assessee did not raise these issues/grounds before the AO or l....
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....tial presumption is serious in nature and he had to pay penalty from 100% to 300% 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, 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. 60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two offences but in such cases the initiation of the penalty proceedings also must be for both the offences. But drawing up penalty proceedings for one offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law. It is needless to point out satisfaction of the existence of the grounds mentioned in Section 271(1)(c) when it is a sine qua non for initiation or proceedings, the penalty proceedings should be confined only....
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....en the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. INDEPENDENT PROCEEDING 62. The penalty proceedings are distinct from assessment proceedings, and independent therefrom. The assessment proceedings are taxing proceedings. The proceedings for imposition of penalty though emanating from proceedings of assessment are independent and separate aspects of the proceeding. Separate provision is made for the imposition of penalty and separate notices of demand are made for recovery of tax and amount of penalty. Also separate appeal is provided against order of imposition of penalty. Above all, normally, assessment proceedings must precede penalty proceedings. Assessee is entitled to submit fresh evidence in the course of penalty proceedings. It is because penalty proceedings are independent proceedings. The assessee cannot question the assessment jurisdiction in penalty proceedings. Jurisdiction under penalty proceedings can only be limited to the issue of penalty, so that validity of the ass....
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.... by a legal fiction constitute concealment because of deeming provision. (g) Even if these conditions do not exist in the assessment order passed, at least, a direction to initiate proceedings under Section 271(1)(c) is a sine qua non for the Assessment Officer to initiate the proceedings because of the deeming provision contained in Section 1(B). (h) The said deeming provisions are not applicable to the orders passed by the Commissioner of Appeals and the Commissioner. (i) The imposition of penalty is not automatic. (j) Imposition of penalty even if the tax liability is admitted is not automatic. (k) Even if the assessee has not challenged the order of assessment levying tax and interest and has paid tax and interest that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment order that, it is on account of such unearthing or enquiry concluded by authorities it has resulted in payment of such tax or such tax liability came to be admitted and if not it would have escaped from tax net and as opined by the Assessing Officer in the assessme....
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....of CIT vs. Manjunath Cotton and Ginning Factory (supra) the Hon'ble Karnataka High Court in case of CIT SSA's Emerald Meadows (supra) has again decided this issue in favour of the assessee and against the Revenue. The SLP filed by the Revenue against the said decision of Hon'ble Karnataka High court has been dismissed by the Hon'ble Supreme Court reported in 242 taxman 150.Thus, the decision of Hon'ble Karnataka High Court in case of CIT vs. Manjunath Cotton and Ginning Factory (supra) has not disturbed by the Hon'ble Supreme Court. We further note that the Hon'ble Jurisdictional High Court in case of Sheveta Construction Company Pvt. Ltd vs. ITO (supra) has considered an identical issue in para 5 to 10 as under:- "5. Counsel for the appellant relied upon the decision of Andhra Pradesh High Court in case of Chennakesava Pharmaceuticals Vs. Commissioner of Income Tax reported in (2012) 349 ITR 196, wherein it has been held as under:- In Reliance Petroproducts (P.) Ltd.'s case (1 supra), the Supreme Court also held that imposition of penalty is unwarranted when there is no finding in the assessment order that details supplied by the assessee were found to be fal....