TMI Blog2017 (5) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... ncealed the particulars of income or furnished inaccurate particulars of income. Even the show-cause notice did not specify the limb / offence for which the penalty was being initiated. Finally, the penalty has been levied for filing of inaccurate particulars of income leading to concealment of income which shows inconsistent thinking on the part of AO. Undisputedly, the AO was required to specify the exact charge for which the assessee was being penalized which he has failed to do so and the same has resulted into taking away assessee’s valuable right of contesting the same and thereby violates the principles of natural justice. In the case of CIT Vs. Smt. Kaushalya [1995 (1) TMI 25 - BOMBAY High Court ], the Hon’ble jurisdictional Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake up ITA No. 7371/M/2014 for AY 2003-04 where the assessee is saddled with penalty of ₹ 80,94,048/- which has been confirmed by Ld. CIT(A) vide order dated 28/08/2014. Since legal grounds goes to the root of the matter, we take up the same first. 3. Briefly stated the assessee, being resident corporate assessee engaged in the processing and trading of gem stones , was assessed u/s 143(3) at loss of ₹ 13,46,690/- after certain adjustments / disallowances as against returned loss of ₹ 23,51,285/-. One of the disallowance of was related to abnormal loss of ₹ 2,20,24,623/- claimed by the assessee against sale to associated concern which was disallowed being non bona fide business loss on account of unjustifiable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /clause/limb. Finally, the penalty has been imposed by Ld. AO in the penalty order by stating that It has been established that the assessee furnished inaccurate particulars of income leading to concealment of income. The assessee has furnished particulars which were factually incorrect and not bona fide for which penalty is leviable .Thus, the assessee not only concealed the particulars of its income but also filed inaccurate particulars while filing return of income. Therefore, the same reflects non-application of mind on the part of AO and the AO himself was not sure about the limb / exact charge for which the assessee was being penalized. Therefore, the penalty order stands vitiated for want of principles of natural justice and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Perinchery [ITA No. 1154 of 2014 order dated 05/01/2017] and further Tribunal, in catena of judgment and more particularly in Wadhwa Estate Developers Vs. ACIT [ITA N0. 2158/Mum/2016 dated 24/02/2017] has taken the same view following the aforesaid judgments. Therefore, the penalty, being devoid of jurisdiction, was liable to be quashed. 6. Per contra, the Ld. Departmental representative placed reliance on Section 292B to contend that mere defect in the notice do not vitiates the penalty proceedings and no prejudice was caused to the assessee by non-striking off of relevant words. The assessee very well knew the grounds for which he was being penalized and the Ld. AO with due application of mind initiated penalty proceedings in q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leading to concealment of income which shows inconsistent thinking on the part of AO. Undisputedly, the AO was required to specify the exact charge for which the assessee was being penalized which he has failed to do so and the same has resulted into taking away assessee s valuable right of contesting the same and thereby violates the principles of natural justice. Our view is fortified by the cited judicial pronouncements of superior court and even the SLP filed by the revenue in CIT Vs. SSA s Emerald Meadows [supra] has been dismissed by the Apex Court, being devoid of any merits. Even in the case of CIT Vs. Smt. Kaushalya [supra], the Hon ble jurisdictional High Court observed that the notice issued under Section 274 must reveal app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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