TMI Blog2017 (9) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... from vice of non-application of the mind having regard to the ratio of the decision in the case of the Dilip N. Shroff (2007 (5) TMI 198 - SUPREME Court) and Bombay High Court in the case of Samson Perinchery (2017 (1) TMI 1292 - BOMBAY HIGH COURT ). Thus we delete the penalty levied u/s. 271(1)(c) of the Act on the preliminary point. - Decided in favour of assessee. - ITA NO.1098/MUM/2015 - - - Dated:- 18-8-2017 - SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER For The Assessee : Shri Naresh Jain For The Department : Ms. Pooja Swaroop ORDER PER C.N. PRASAD (JM) 1. This appeal is filed by the assessee against the order of the Commissioner of Income-tax (Appeals)-21, Mumbai in sustaining the penalty levied u/s 271(1)(c) of the Act. Assessee in its appeal raised additional ground of appeal as under: - that the Ld. AO erred in law in issuing notice U/s 274 without mentioning the limb of section 271 under which penalty is proposed to be levied, and as such, the notice issued without application of mind is bad in law and liable to be quashed and that the proceedings are void-ab-initio. 2. Learned Counsel for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tentions that the Assessing Officer has levied penalty with the authority and there is no defect in the notice issued u/s 271(1)(c) of the Act and in any case the defect is curable under 292B of the Act. 6. We have heard the rival submissions perused the orders of the authorities below. We have perused the penalty notice issued u/s 274 r/w 271(1)(c) and also the Assessment Order passed u/s 143(3) of the Act. It is abundantly clear from these that the Assessing Officer failed to strike of the relevant limb in initiating the penalty proceedings, charge is not made clear. Similar situation was considered by the Coordinate Bench in the case of Meherjee Cassinath Holdings Private Limited v. ACIT (supra) and the implication of non-striking of the relevant portion of the notice and not specifying the charge while imposing the penalty u/s 271(1)(c). It was held that if there is no specific charge mentioned by the Assessing Officer for imposing of penalty, the penalty cannot be sustained. While holding so the Coordinate Bench held as under:- 8. We have carefully considered the rival submissions. Sec. 271(1)(c) of the Act empowers the Assessing Officer to impose penalty to the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the following specific discussion in the order of Hon'ble Supreme Court in the case of Dilip N. Shroff(supra):- 83. It is of some significance that in the standard proforma used by the Assessing Officer in issuing a notice despite the fact that thesome postulates that inappropriate words and paragraphs were to be deleted, but the some had not been done. Thus, the Assessing Officer himself was not sure as to whether he had proceeded on the basis that the assessee had concealed his income or he had furnished to Meherjee Cassinath Holdings Pvt. Ltd.inaccurate particulars. Even before us, the learned Additional Solicitor General while placing the order of assessment laid emphasis that he had dealt with both the situations. 84. The impugned order, therefore, suffers from non-application of mind. It was also bound to comply with the principles of natural justice. (See Malabar industrial Co. Ltd. v. CIT [2000] 2 5CC 718] 9. Factually speaking, the aforesaid plea of assessee is borne out of record and having regard to the parity of reasoning laid down by the Hon'ble Supreme Court in the case of Dilip N. Shroff (supra), the notice in the instant case does suf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay High Court in the case of Smt. Kaushalya Ors., (supra) as also the judgments of the Hon'ble Supreme Court in the case of Dump N. Shroff (supra) and Dharrnendra Textile Processors, 306 1TR 277 (SC) deduced as under :- ''12. A combined reading of the decision rendered by Hon'ble Bombay High Court in the case of Smt. B Kaushalya and Others (supra) and the decision rendered by Hon'ble Supreme Court in the case of Dilip N Shroff (supra) would make it clear that there should be application of mind on the part of the AD at the time of issuing notice. In the case of Lakhdir Lalji (supra), the AD issued notice u/s 274 for concealment of particulars of income but levied penalty for furnishing inaccurate particulars of income. The Hon'ble Gujarat High Court quashed the penalty since the basis for the penalty proceedings disappeared when it was held that there was no suppression of income. The Hon'ble Kerala High Court has struck down the penalty imposed in the case of N.N.Subramania lyer Vs. Union of India (supra), when there is no indication in the notice for what contravention the petitioner was called upon to show cause why a penalty should not be imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irrelevant clause has not been struck-off. Quite clearly, the observation of the Assessing Officer in the assessment order and non-striking off of the irrelevant clause in the notice clearly brings out the diffidence on the part of Assessing Officer and there is no clear and crystallised charge being conveyed to the assessee u/s 271(1)(c), which has to be met by him. As noted by the Hon'ble Supreme Court in the case of Dilip N. Shroff (supra), the quasi-criminal proceedings u/s 271(1)(c) of the Act ought to comply with the principles of natural justice, and in the present case, considering the observations of the Assessing Officer in the assessment order alongside his action of non-striking off of the irrelevant clause in the notice shows that the charge being made against the assessee qua Sec. 271(1)(c) of the Act is not firm and, therefore, the proceedings suffer from non-compliance with principles of natural justice inasmuch as the Assessing Officer is himself unsure and assessee is not made aware as to which of the two limbs of Sec. 271(1)(c) of the Act he has to respond. 14. Therefore, in view of the aforesaid discussion, in our view, the notice issued by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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