TMI Blog2017 (12) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Act (the Act) is directed against the order of ld. Commissioner of Income Tax (Appeals)-2 [the CIT(A)], Thane dated 11.02.2015 for the Assessment Year 2008-09. The assessee has raised the following Grounds of appeal: 1. On the facts and in circumstances of the case the learned ACIT-circle 3- Thane erred in passing the penalty order u/s. 271(1)(c) of Income tax Act, 1961 of ₹ 5,06,20,290/- and CIT(A)-l Thane erred in confirming the same though there was no mens rea or guilty mind which is a vital point in the expression concealment as envisaged in section 271(1)(c) and if there is no guilty mind, no penalty can be levied. Further, merely because the claim of the appellant u/s.36(1)(viia) is found to be excess/not acceptable and restricted to the extent of provision for Bad and Doubtful Debt debited to Profit and Loss account by any stretch of imagination does not tantamount to concealment of income or furnishing incorrect particulars of income. 'Further for few rural branches advances not found to be eligible for claim ix] , 36(1)(viia) is brought to the notice of Learned A.O. by appellant himself, during the course of assessment and the said claim was ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after claiming eligible deduction u/s 36(1)(viia) in good faith on the basis of data, information then available to the Bank from various branches. The assessee furnished the true and correct particulars of income and nothing material fact was concealed. The assessee shown declared correct information and particulars of income and Profit Loss A/c, statement of total income and claimed eligible deduction. Thus, there was no occasion for concealment or furnishing the inaccurate information. It was argued that merely the claim of assessee was found not acceptable by AO, it cannot be said that assessee concealed the particular of income. It was further argued that mere addition/disallowance does not automatically lead to levy of penalty. In support of additional grounds of appeal, the ld. AR of the assessee argued that the penalty order passed by AO is bad-in-law. The AO failed to mention, if the penalty is being levied for concealment or for furnishing inaccurate particulars of income in the assessment order. The show-cause notice dated 19.01.2011 u/s 274 r.w.s. 271(1)(c) of the Act does not satisfied the specific charge as the AO has not specified the charge the notice of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was issued without specifying the charge. We find force in the submissions of ld. AR for the assessee, that the notice does not contain any reference about the specific charge, if the same was issued for concealment of income or furnishing inaccurate particulars. The ld. AR of the assessee besides the other relied upon the decision of Hon ble jurisdictional High Court in CIT vs. Samson Perinchary (supra) and the decision of Meherjee Cassinath Holdings P. Ltd. (supra), ( in which one of us is coauthored) In the said decision, the Co-ordinate Bench of this Tribunal made the following observations: 8. We have carefully considered the rival submissions. Sec. 271(1)(c) of the Act empowers the Assessing Officer to impose penalty to the extent specified if, in the course of any proceedings under the Act, he is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. In other words, what Sec. 271(1)(c) of the Act postulates is that the penalty can be levied on the existence of any of the two situations, namely, for concealing the particulars of income or for furnishing inaccurate particulars of income. Therefore, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded on the basis that the assessee had concealed his income or he had furnished 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 SCC 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 suffer from the vice of non-application of mind by the Assessing Officer. In fact, a similar proposition was also enunciated by the Hon'ble Karnataka High Court in the case of M/s. SSA's Emerald Meadows (supra) and against such a judgment, the Special Leave Petition filed by the Revenue has since been dismissed by the Hon'ble Supreme Court vide order dated 5.8.2016, a copy of which is also placed on record. 10. In fact, at the time of hearing, the ld. CIT-DR has not disputed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74 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 Iyer 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 imposed. In the instant case, the AO did not specify the charge for which penalty proceedings were initiated and further he has issued a notice meant for calling the assessee to furnish the return of income. Hence, in the instant case, the assessing officer did not specify the charge for which the penalty proceedings were initiated and also issued an incorrect notice. Both the acts of the AO, in our view, clearly show that the AO did not apply his mind when he issued notice to the assessee and he was not sure as to what purpose the notice was issued. The Hon'ble Bombay High Court has discussed about non-application of mind in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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 Assessing Officer u/s 274 r.w.s. 271(1)(c) of the Act dated 10.12.2010 is untenable as it suffers from the vice of non- application of mind having regard to the ratio of the judgment of the Hon'ble Supreme Court in the case of Dilip N. Shroff (supra) as well as the judgment of the Hon'ble Bombay High Court in the case of Shri Samson Perinchery (supra). Thus, on this count itself the penalty imposed u/s 271(1)(c) of the Act is liable to be deleted. 7. The ld. DR for the Revenue relied upon the decision of Co-ordinate Bench in Dhaval K. Jain (supra) and the decision of jurisdictional High Court in CIT v/s Smt. Kaushalya Ors. (supra) may refer that the H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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