TMI Blog2017 (8) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... ot specify as to whether penalty proceedings is initiated for concealment of particulars of income or for furnishing inaccurate particulars of income and hence, the notice issued u/s 274 r.w.s. 271(1)(c) is invalid and consequent initiation of penalty proceedings is absurd and redundant. Therefore, the consequent levy of penalty u/s 271(1)(c) in all the cases under appeal is void ab initio; hence the penalty orders are hereby quashed. - Decided in favour of assessee. - I.T.A No.1650, 1651, 1652, 1653, 3113/Mum/2017, I.T.A No.1654, 1655, 1656, 1657/Mum/2017 - - - Dated:- 26-7-2017 - Shri Saktijit Dey (Judicial Member) And Shri G Manjunatha (Accountant Member) Appellant by : S/Shri V Chandra Sekhar / Ashok Suthar Respondent by : Arju Garodia ORDER Per G Manjunatha, AM These are nine appeals filed by two different assesses and are directed against separate, but identical orders of the CIT(A)-52, Mumbai dated 02-03- 2017 confirming levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961 for the assessment years 2001-02, 2003-04, 2004-05, 2006-07 and 2007-08. Since, facts are identical and issue is common in all the appeals, we heard them together and are dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessees and also on verification of the transactions of the assessee it is clear that these transactions were never done through the stock exchange and hence, there was deliberate attempt to camouflage the income into LTCG and claimed exemption. Insofar as addition towards agricultural income and unexplained money, the assessees have failed to file satisfactory explanations, therefore, the AO opined that the assessees have deliberately concealed particulars of their income or have furnished inaccurate particulars of income which warrants levy of penalty u/s 271(1)(c). Accordingly, the assessing officer levied penalty equivalent to 100% of tax sought to be evaded. Aggrieved by the penalty orders, the assessees preferred appeals before CIT(A) and challenged levy of penalty on two grounds. 4. The assessees have challenged the initiation of penalty on the ground that the notice issued by the AO u/s 274 r.w.s. 271(1)(c) is vague in nature as the AO has not struck off all irrelevant portion in the notice so as to charge the assessee whether he proposed to levy penalty on concealment of particulars of income or furnishing of inaccurate particulars of income. The assessee also ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 271(1)(c) of the Act. The Ld.AR referring to the copy of notice issued u/s 274 r.w.s. 271 dated 16-12-2011 submitted that the AO issued a printed form of notice, which contains all allegations that may be made u/s 271(1)(c) without striking off the irrelevant portion in the notice which clearly indicates that the AO has not applied his mind before initiation of penalty proceedings. The Ld.AR further submitted that the notice does not specify as to whether it is for concealment of income or for furnishing inaccurate particulars of income which is a precondition for imposing penalty u/s 271(1)(c) of the Act. The assessee should know under which limb the AO is charging or accusing the assessee, whether it is for concealment of particulars of income or for furnishing of inaccurate particulars of income. Initiation of penalty under one limb and levying penalty under another limb violates the principles of natural justice as the assessees are not given to know under which limb they have to justify the proposed initiation of penalty proceedings. In support of his argument, he relied upon the decision of Hon ble Bombay High Court in the case of CIT vs Samson Perinchery in ITA No.1154 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessees were aware of the charges they had to meet and were given an opportunity of being heard. A mistake in the notice would not invalidate the penalty proceedings. The DR referring to the decision of Hon ble Bombay High Court in the case of CIT vs Samson Perinchery (supra) and the Hon ble Karnataka High Court in the case of Manjunatha Cotton Ginning Factory Ltd (supra) submitted that in the cases before the Hon ble Bombay High Court as well as Karnataka High Court, the question before the High Court was whether the AO can initiate penalty proceedings under one limb and levy penalty under another limb. In those facts and circumstances, the Hon ble Courts held that the AO cannot initiate penalty proceedings on one limb and levy penalty on another limb. In this case, on perusal of the notice issued by the AO u/s 274, it is abundantly clear that the AO has charged the assessee on two grounds, i.e. for concealment of particulars of income or furnishing of inaccurate particulars of his income. Therefore, the case laws relied upon by the Ld.AR are not applicable to the facts of the present case. 9. We have heard both the parties and perused material available on record. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vident from the fact that in the assessment order, the AO stated that penalty u/s 271(1)(c) was proposed for concealment of particulars of income or furnishing of inaccurate particulars of income. Even in the notice issued u/s 274, the AO mentioned both the grounds, i.e. concealment of income or furnishing of inaccurate particulars of income, but he has levied penalty for furnishing of inaccurate particulars of income. From the above, it is clear that the AO has not arrived at a satisfaction before initiation of penalty proceedings whether he had charged the assessee for concealment of particulars of income or furnishing of inaccurate particulars of income. Initiating penalty on one ground and finding the assessee guilty on another ground violates the principles of natural justice as the assessee cannot have an iota of justifying his case before the authorities. Therefore, we are of the view that if the notice is issued u/s 274 r.w.s. 271(1)(c) without specifying the ground on which the penalty is proposed to be levied or without striking off the irrelevant portion in the notice invalidates the penalty proceedings. 11. The Hon ble Karnataka High Court ,in the case of CIT vs Manj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f penalty under Section 271 (1) (c) of the Act by Assessing Officer was for furnishing inaccurate particulars of income the order imposing penalty is for concealment of income. The impugned order holds that the concealment of income and the particulars of income carry different connotations. Therefore, the Assessing Officer should be clear as to which of the penalty is imposable, has been contravened or both have been contravened while initiating penalty proceedings. It cannot be that the initiation would be only on one limb i.e for furnishing inaccurate particulars of income while imposition of the other limb i.e. concealment of income. Further, the Tribunal also noted that notice issued under Section 274 of the Act is in a standard proforma, without having striked out irrelevant clauses therein. This indicates non-application of mind on the part of the Assessing Officer while issuing the penalty notice. 4. The impugned order relied upon the following extract of Karnataka High Court(s) decision in CIT v/s. Manjunatha Cotton and Ginning Factory 359 ITR 565 to delete the penalty:- a The Assessing Officer is empowered under the Act to initiate penalty proceedings once he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been initiated, and it cannot be on a fresh o of which the Assessee has no notice. 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 Manjunath Cotton and Ginning Factory (supra). 13. The assessee relied upon the decision of ITAT, Mumbai Bench B in the case of Dr. Sarita Milind Davare (supra). The co-ordinate bench of this Tribunal, under similar facts and also considering the ratio of Hon ble Bombay High Court in the case of CIT vs Smt. Kushalya Others 216 ITR 660 (Bom) and also after analyzing the provisions of section 292BB, held that the AO has issued a notice that too incorrect one in a routine manner. Further, the notice did not specify the charge for which the penalty notice was issued. The Tribunal further referring to the submissions of the Ld.DR with regard to the provisions of section 292BB observed that mere perception in assessment proceedings will not cure the defect in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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