TMI Blog2018 (4) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... see, at the outset submitted that initiation of penalty is bad in law as there is no specific charge mentioned in the notice issued u/s. 274 r.w.s. 271 of the Act. Ld. Counsel for the assessee referring to Page No. 41 and 42 of the Paper Book which is the copy of notice issued u/s. 274 r.w.s. 271 initiated the penalty he submits that it is not specified in the notice whether the penalty is going to be levied for concealment of income or furnishing inaccurate particulars. Learned Counsel for the assessee submitted that in the absence of specific charge mentioned in the notice by striking off of irrelevant charge the initiation is bad in law. Ld. Counsel for the assessee refereing to the penalty order submitted that the Assessing Officer stated that the penalty was issued for concealing income at Para No.7 and stated that assessee is concealed particulars of income at para No.8. Therefore, he submitted that the charge is vague and the Assessing Officer is not clear as to for which charge the penalty is levied and therefore the penalty order is bad in law. He placed reliance on the of the Coordinate Bench in the case of Shri Jayant B Patel v. ACIT in ITA.No. 1650 to 1653/Mum/2017 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tence 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 preliminary plea of assessee, which is bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Hon'ble Bombay High Court also i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew, 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 Supreme Court in the case of Dilip N. Shroff (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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