TMI Blog2017 (6) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... imposition of penalty u/s.271(1)(c) of the IT Act of ₹ 1,93,602/-. 3. Facts in brief are that the Assessee is mainly deriving commission income. The return of income was filed u/s 139(1) declaring a total income of ₹ 1,94,655/- on 22nd March 2007. The return was picked up for assessment u/s 148 on the basis of information available with the AO on 25th March 2013. The Assessee has filed return of income u/s 148 declaring the income of ₹ 7,88,270/- by including the income from other sources of ₹ 5,93,622/- and paid tax accordingly to buy peace and avoid litigation. The assessing officer has passed the order u/s u/s.143(3) r.w.s 147 by accepting the income offered by the Assessee as income from other sources of ₹ 5,93,622/-. 4. With respect to the income so offered and accepted by the AO, AO also levied penalty u/s.271(1)(c) which was confirmed by the CIT(A) and assessee is in further appeal before us. 5. It was argued by learned AR that during the course of assessment proceeding itself, assessee has voluntarily offered the income of ₹ 5,93,622/- for which assessee s claim of long term claim was declined. Our attention was also invited to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which Inter alia included long-term capital gain on sale of shares amounting to ₹ 29,74,951. The return was processed in terms of section 143(l)(a) of the Act on 15-3-1999. Subsequently, on the basis of some information with regard to sale proceeds of the shares amounting to ₹ 32,40,385 on which the capital gain was declared at ₹ 29,74,951 by the assessee in the original return, a notice under section 148 of the Act was issued. Pursuant to the said notice, the assessee filed the revised return of income showing higher income. The said return of income was accompanied by a note in which the assessee submitted that he surrendered the entire amount of sale proceeds of shares to buy peace of mind and to avoid hazards of litigation and also to save himself from any penal action. Later on, on the basis of revised return, the assessment was framed and the return submitted by the assessee was regularized as it is. During the course of assessment, the aforesaid explanation given by the assessee was neither rejected nor it was held to be mala fide. The Tribunal has recorded a pure finding of fact to the effect that the revenue has not placed on record any material or evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attention was also invited to the quantum order wherein no satisfaction was found to be recorded by the AO as to whether he wants to initiate penalty proceedings for concealment of income or furnishing inaccurate particulars of income. In the quantum order, the AO has just mentioned that penalty proceedings u/s.271(1)(c) of the Act are initiated separately. As per learned AR Mr. Tarun Ghai, there is no allegation as to whether penalty was to be levied for furnishing inaccurate particulars or for concealment of income. Reliance was placed on the decision of Hon ble Bombay High Court in the case of Samson Perinchery and the series of the decision of the Tribunal wherein penalty was deleted on the plea that in the notice issued u/s.274 r.w.s.271 (1)(C), AO has not deleted the inappropriate words. 9. On the other hand, learned DR relied on the order of the lower authorities and contended that since the capital gain offered by the assessee was found to be non-genuine, AO was justified in levying the penalty. As per learned DR, merely non-striking of inappropriate words in the notice will not invalidate the proceedings in so far as assessee has participated in the penalty proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is only when the authority invested with the requisite power is satisfied that either of the two events existed in a particular case that proceedings u/s. 271(1)(c) of the Act are initiated. This pre-requisite should invariably be evident from the notice issued u/s. 274 r.w.s. 271 of the Act, which is the jurisdictional notice, for visiting an assessee with the penal provision. The intent and purpose of this notice is to inform the assessee as to the specific charge for which he has been show caused so that he could furnish his reply without any confusion and to the point. In the present case, neither the assessee nor anyone else could make out as to whether the notice u/s. 274 r.w.S. 271 of the Act was issued for concealing the particulars of income or for furnishing inaccurate particulars of such income disabling it to meet with the case of the Assessing Officer. There are a catena of judgments highlighting the necessity for identifying the charge for which the assessee is being visited and in all those decisions, Hon'ble Courts have repeatedly held that where the jurisdictional notice is vague, similar to the one in the present case, the consequent levy cannot be sustain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant clauses will lead to an inference as to non-application of mind. 16. Thereafter, in so far as the manner in which the statutory notice was required to be issued, the Hon'ble Court concluded thus: (p) Notice u/s 274 of the Act should be specifically state the grounds mentioned in section 271(1)(c), i.e. whether it is for concealment of income or for furnishing of incorrect particulars of income. 17. Finally, in concurring with the findings recorded in the order of the Tribunal, it was held thus: 66. In view of the aforesaid law, we are of the view that the Tribunal was justified in holding that the entire proceedings are vitiated as the notice issued is not in accordance with law and accordingly justified in interfering with the order passed by the appellate authority as well as the assessing authority and in setting aside the same. Hence, we answer the substantial questions of law framed in this case in favour of the assessee and against the Revenue. 18. The aforesaid judgment was unsuccessfully challenged by the revenue before the Supreme Court, as it was rejected vide Petition for Special Leave to Appeal (C) No. 13898/2014 dated 11.07.2016. Relian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntified, as in the present case. In deleting the levy, so far as non-specification of the default in the jurisdictional notice, the following findings were recorded by the Hon'ble Bombay High Court: 7 Therefore, the issue herein stands concluded in favour of the Respondent-Assessee by the decision of the Karnataka High Court in the case of Manjunath Cotton and Ginning Factory (supra). 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 Menjuneth Cotton and Ginning Factory (supra). 8. In view of the above, the question as framed do not give rise to any substantial question of law Thus, not entertained 22. The Hon'ble Supreme Court in Dilip N. Shroff v/s JCIT, [2007] 291 ITR 519 (SC), has observed that while issuing the notice under section 274 r/w section 271, in the standard format, the Assessing Officer should delete the inappropriate words or paragraphs, otherwise, it may indicate that the Assessing Officer himself was not sure as to whether he had proceeded on the basis that the assessee had concealed his income or had furnished inaccurate particulars of income. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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