|COURT:||Bombay High Court|
|CORAM:||A. K. Menon J., M. S. Sanklecha J|
|CATCH WORDS:||concealment of income, furnishing inaccurate particulars of income, penalty|
|COUNSEL:||V. S. Hadade|
|DATE:||January 5, 2017 (Date of pronouncement)|
|DATE:||February 3, 2017 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 271(1)(c): Failure by the AO to specify in the s. 274 notice whether the penalty is being initiated for 'furnishing of inaccurate particulars of income' or for 'concealment of income' is fatal. It reflects non-application of mind and renders the levy of penalty invalid (Manjunatha Cotton 359 ITR 565 (Kar) followed)|
The Tribunal (order is attached) noted that the notice issued u/s 274 of the Act stated: “have concealed the particulars of your income or ________ Furnished inaccurate particulars of such income”. It held that knowingly or otherwise, the AO has not bothered to fill the blanks with appropriate limb of the provisions of section 271(1)(c) of the Act and that it revealed that the AO has not applied his mind to the fact for which reason of the penalty, the notices were issued. It followed CIT vs. Manjunatha Cotton & Ginning Factory 359 ITR 565  35 Taxmann.com 250 (Kar) and held that the levy of penalty is not sustainable. On appeal by the department to the High Court HELD dismissing the appeal:
(i) The grievance of the Revenue before us is that there is no difference between furnishing of inaccurate particulars of income and concealment of income. Thus, distinction drawn by the impugned order is between Tweedledum and Tweedledee. In the above view, the deletion of the penalty, is unjustified.
(ii) The above submission on the part of the Revenue is in the face of the decision of the Supreme Court in Ashok Pai v/s. CIT 292 ITR 11 [relied upon in Manjunath Cotton & Ginning Factory (supra)] – wherein it is observed that concealment of income and furnishing of inaccurate particulars of income in Section 271(1)(c) of the Act, carry different meanings/ connotations. Therefore, the satisfaction of the Assessing Officer with regard to only one of the two breaches mentioned under Section 271(1)(c) of the Act, for initiation of penalty proceedings will not warrant/ permit penalty being imposed for the other breach. This is more so, as an Assessee would respond to the ground on which the penalty has been initiated/notice issued. It must, therefore, follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the Assessee has no notice.
(iii) Therefore, the issue herein stands concluded in favour of the Assessee by the decision of the Karnataka High Court in the case of CIT vs. Manjunatha Cotton & Ginning Factory 359 ITR 565. Nothing has been shown to us in the present facts which would warrant our taking a view different from the Karnataka High Court in the case of Manjunath Cotton and Ginning Factory (supra).
(iv) In view of the above, the question as framed does not give rise to any substantial question of law. Thus, not entertained.