TMI Blog2017 (1) TMI 1034X X X X Extracts X X X X X X X X Extracts X X X X ..... al by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-V, Pune dated 21-08-2012 for the assessment year 2007-08 confirming the levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The brief facts of the case as emanating from records are: The assessee is engaged in trading of food grain items on wholesale basis. The assessee filed his return of income for the assessment year 2007-08 on 31-10-2007 declaring total income of ₹ 4,57,030/-. A survey u/s. 133A of the Act was carried out on the business premises of Chhablani Group on 24-08-2009. During the course of survey the assessee voluntary declared ₹ 43,00,000/- as additional income for assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alment of income or furnishing of inaccurate particulars of income. Further, the notice issued u/s. 274 r.w.s. 271(1)(c) of the Act dated 07-12-2010 does not specify the charge for which the penalty proceedings are initiated. The Assessing Officer has not struck off the irrelevant parts of the proforma notice. It is a well settled law that notice issued without specifying the charge for levy of penalty is not sustainable and the subsequent proceedings arising therefrom are liable to be set aside. In support of his submissions the ld. AR placed reliance on the decision of Hon ble Karnataka High Court in the case of Commissioner of Income Tax Vs. SSA S Emerald Meadows reported as 73 taxmann.com 241. The ld. AR further submitted that the Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruck off. Thus, the notice does not clearly specify whether the penalty u/s. 271(1)(c) has been levied for concealment of income or furnishing of inaccurate of particulars of income. The Hon ble Karnataka High Court in the case of Commissioner of Income Tax Vs. Manjunatha Cotton and Ginning Factory reported as 359 ITR 565 has held that, when the Assessing Officer proposes to invoke the first limb being concealment, then 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 . The Hon ble High Court further held that notice u/s. 274 of the Act should specifically s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccurate particulars of income are different. The Hon ble High Court has thus, laid down that the Assessing Officer while issuing notice has to come to conclusion that whether it is case of concealment of income or case of furnishing of inaccurate particulars of income. The reliance in this regard was placed on the ratio laid down by the Hon ble Supreme Court in T. Ashok Pai Vs. CIT (2007) 292 ITR 11 (SC), wherein at page 19 it was held that concealment of income and furnishing inaccurate particulars of income carry different connotation. Applying the said proposition, it was held that where the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similarly, for furnishing ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenged by the assessee to be invalid. Applying the ratio laid down by the Hon ble Karnataka High Court in CIT Anr. Vs. Manjunath Cotton and Ginning Factory (supra) and CIT Vs. SSA S Emerald Meadows (supra) and in view of SLP being dismissed, we find merit in the plea of assessee that the satisfaction recorded in the present case to initiate penalty proceedings both for concealment of income and furnishing of particulars of income against additional income offered by the assessee is incorrect. Further, where the assessee is not aware of exact charge against him, the ambiguity in the notice issued under section 274 r.w.s. 271(1)(c) of the Act by not striking of portion which is not applicable, prejudice the right of reasonable opportunit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l nonstriking of certain terms in the notice would not invalidate the proceedings. Where there is default in the first stage of making the assessee aware of exact charge of the Department, then initiation of penalty proceedings are vitiated and the same are to be quashed. The issue of notice under section 274 of the Act on such vagueness and ambiguity makes such notice invalid and proceedings thereafter are to be quashed. 25. The Hon ble Supreme Court in T. Ashok Pai Vs. CIT (supra) had held as under:- 23. Section 271(1)(c) remains a penal statute. The rule of strict construction shall apply thereto. The ingredients for imposing penalty remain the same. The purpose of the Legislature that it is meant to be a deterrent to tax ev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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