TMI Blog2017 (5) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... ut striking off the irrelevant words, the penalty proceedings show a non-application of mind by the Assessing Officer and is, thus, unsustainable. At the time of initiation of penalty, the Assessing Officer was quite unsure as to which of the two sections namely, section 271(1)(c) of the Act or section 271AAA of the Act was he intending to proceed. Such an approach is also reflective of non application of mind by the Assessing Officer. Appeal allowed - decided in favor of appellant. - ITA No.4168/MUM/2013 (AY. 2008-09) - - - Dated:- 28-4-2017 - SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER For The Appellant : Shri Subodh Ratnaparkhi For The Respondent : Dr.A.K.Nayak ORDER PER G.S.PAN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was receiving incomes outside the books of account. Notably, in the course of its business activity, assessee had constructed a building at Navi Mumbai by the name Ellora consisting of various flats and shops. The Assessing Officer, based on the material found and seized during the course of search, namely, diaries, inferred that assessee was receiving on-money in cash on sale of units in Ellora , which was not accounted for in the Books of Account. Pertinently, the factum of the receipt of unaccounted consideration in cash was also admitted by the assessee and it suo-motu declared additional income on this count. In the return filed in response to the notice under section 153A of the Act assessee declared a total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... most plea raised by the assessee is founded on the argument that the Assessing Officer was unsure about the nature of default committed by the assessee. In this context, he has referred to the two notices issued under section 274 of the Act on 30/12/2010; one under section 274 r.w.s. 271(1)(c) of the Act and second under section 274 of the Act r.w.s. 271AAA of the Act. Furthermore, it is sought to be pointed out that even in the notice issued under section 274 r.w.s. 271(1)(c) of the Act in the standard proforma, the irrelevant portion in the notice has not been struck-off and, therefore, the notice does not specify the exact ground on which penalty is to be charged i.e. whether for concealment of income or for furnishing of inaccurate part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on one limb i.e. for furnishing inaccurate particulars of income while it has been imposed on the other limb i.e. for concealment of income. The Ld. Departmental Representative pointed out that in the case before the Hon'ble High Court the position was different, inasmuch as, the penalty was imposed on one limb while it was initiated for the other limb. 6. We have carefully considered the rival submissions with regard to the preliminary plea of the assessee in terms of which the validity of the proceedings initiated under section 271(1)(c) of the Act has been sought to be challenged. The sum-and-substance of the point raised by the assessee is that the notice issued by the Assessing Officer under section 274 r.w.s. 271(1)(c) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act without striking of the irrelevant clauses would lead to an inference of non-application of mind by the Assessing Officer. The Hon ble Supreme Court in the case of Dilip N. Shroff vs. JCIT, 291 ITR 519(SC) has also noticed that where the Assessing Officer issues notice under section 274 of the Act in the standard proforma and the inappropriate words are not deleted, the same would postulate that the Assessing Officer was not sure as to whether he was to proceed on the basis that the assessee had concealed the particulars of his income or furnished inaccurate particulars of income. According to the Hon ble Supreme Court, in such a situation, levy of penalty suffers from non-application of mind. In the background of the aforesaid legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, what we are trying to emphasize is that at the time of initiation of penalty, the Assessing Officer was quite unsure as to which of the two sections namely, section 271(1)(c) of the Act or section 271AAA of the Act was he intending to proceed. Such an approach is also reflective of non application of mind by the Assessing Officer, and, therefore, following the parity of reasoning laid down by the Hon ble Supreme Court in the case Dilip N. Shroff (supra), Hon'ble Bombay High Court in the case Shri Samson Perinchery (supra) as well as the Hon'ble Karnataka High Court in the case of Manjunatha Cotton Ginning Factory (supra), the notice issued by the Assessing Officer under section 274 r.w.s. 271(1)(c) of the Act dated 30/12/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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