TMI Blog2018 (1) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... staining the penalty levied u/s. 271(1)(c) of the Act. 2. At the outset the Ld. Counsel for the assessee submits that initiation of penalty proceedings u/s. 271(1)(c) of the Act is improper. Ld. Counsel for the assessee submits that the Assessing Officer is not clear as to the charge for which the penalty is initiated i.e. either concealment of income or furnishing inaccurate particulars. Ld. Counsel for the assessee referring to Assessment Order submits that Assessing Officer stated that penalty proceedings u/s.271(1)(c) of the Act were initiated for furnishing inaccurate particulars of income and while passing penalty order penalty was levied for furnishing inaccurate particulars of income and also for concealment of income. 3. Ld. Counsel for the assessee further referring to notice issued u/s.274 r.w.s. 271(1)(c) which is placed at Page Nos. 59A and 57A of the Paper Books filed for the Assessment Years 2000-01 and 2001-02 submits that the Assessing Officer did not specify the charge for which the penalty proceedings were initiated. Ld. Counsel for the assessee submits that the notice has been issued without specifying the charge for which the penalty is initiated as there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 obvious from the phraseology of Sec. 271(1)(c) of the Act that the imposition of penalty is invited only when the conditions prescribed u/s 271(1)(c) of the Act exist. It is also a well-accepted proposition that concealment of the particulars of income and furnishing of inaccurate particulars of income referred to in Sec. 271(1)(c) of the Act denote different connotations. In fact, this distinction has been appreciated even at the level of Hon'ble Supreme Court not only in the case of Dilip N. Shroff (supra) but also in the case of T.Ashok Pai, 292 ITR 11 (SC). Therefore, if the two expressions, namely concealment of the particulars of income and furnishing of inaccurate particulars of income have different connotations, it is imperative for the assessee to be made aware as to which of the two is being put against him for the purpose of levy of penalty u/s 271(1)(c) of the Act, so that the assessee can defend accordingly. It is in this background that one has to appreciate the prelimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;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 the factual matrix, but sought to point out that there is due application of mind by the Assessing Officer which can be demonstrated from the discussion in the assessment order, wherein after discussing the reasons for the disallowance, he has recorded a satisfaction that penalty proceedings are initiated u/s 271(1)(c) of the Act for furnishing of inaccurate particulars of income. In our considered opinion, the attempt of the ld. CIT-DR to demonstrate application of mind by the Assessing Officer is no defence inasmuch as the Hon'ble Supreme Court has approved the factum of non-striking off of the irrelevant clause in the notice as reflective of non-application of mind by the Assessing Officer. Since the factual matrix in the present case conforms to the proposition laid down by the Hon'ble Supreme Court, we proceed to reject the arguments advanced by the ld. CIT-DR based on the observations of the Assessing Officer in the assessment order. Further, it is also noticeable that such proposition has been considered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect 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 of Kaushalya (supra) and observed as under:- .... The notice clearly demonstrated non-application of mind on the part of the Inspecting Assistant Commissioner. The vagueness and ambiguity in the notice had also prejudiced the right of reasonable opportunity of the assessee since he did not know what exact charge he had to face. In this back ground, quashing of the penalty proceedings for the assessment year 1967-68 seems to be fully justified. In the instant case also, we are of the view 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. Hence, in our view, the AO has failed to apply his mind at the time of issuing penalty notice to the assessee. 12. The aforesaid discussion clearly brings out as to the reasons why the parity of reasoning laid down by the Hon'ble Su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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