TMI Blog2018 (12) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... f Ld. Commissioner of Income Tax (Appeals)-I II (in short Ld.CIT(A) ], Indore dated 21.08.2017 which is arising out of the order u/s 271(1)(c) of the Income Tax Act 1961(In short the Act ) dated 28.09.2016 framed by DCIT (Central)- 1, Indore. 2. The assessee has raised following grounds of appeal; Assessment Year 2008-09 1. That the Ld. CIT(A) erred in upholding the action of the AO of levying penalty u/s 271(1)(c) of ₹ 10,00,000/- in respect of the additional income of ₹ 30,36,270/- declared by the appellant in the return of income filed in response to the notice issued u/s 153C. That on the facts and in the circumstances of the case and in law the penalty levied is uncalled for and bad in law and it is prayed that the penalty may very kindly be deleted. 2. That the Ld. CIT(A) erred in upholding the penalty levied u/s 271(1)(c) overlooking the fact that neither the requisite conditions as envisaged by law for the purpose of levying this penalty are present / fulfilled in this case nor the order imposing penalty u/s 271(l)(c) is a speaking order. 3. That the Learned CIT(A) erred in holding that the provisions of explanation 5A to section 271(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty are present / fulfilled in this case nor the order imposing penalty u/s 271 (1)( c) is a speaking order. 3. That the Learned CIT(A) erred in holding that the provisions of explanation 5A to section 271 (1)( c) are applicable in this case. That on the facts and in the circumstances of the case the said observation is wrong and not in accordance with law. The Learned CIT(A) ought not to have confirmed the penalty. 4. That the appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises. Assessment Year 2011-12 1. That the Ld. CIT(A) erred in upholding the action of the AO of levying penalty u/s 271(1)(c) of ₹ 6,00,000/- in respect of the additional income of ₹ 19,35,910/- declared by the appellant in the return of income filed in response to the notice issued u/s 153C. That on the facts and in the circumstances of the case and in law the penalty levied is uncalled for and bad in law and it is prayed that the penalty may very kindly be deleted. 2. That the Ld. CIT(A) erred in upholding the penalty levied u/s 271(1)(c) overlooking the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty levied is uncalled for and bad in law and it is prayed that the penalty may very kindly be deleted. 2. That the Ld. CIT(A) erred in upholding the penalty levied u/s 271(1)(c) overlooking the fact that neither the requisite conditions as envisaged by law for the purpose of levying this penalty are present / fulfilled in this case nor the order imposing penalty u/s 271 (1)( c) is a speaking order. 3. That the Learned CIT(A) erred in holding that the provisions of explanation 5A to section 271 (1)( c) are applicable in this case. That on the facts and in the circumstances of the case the said observation is wrong and not in accordance with law. The Learned CIT(A) ought not to have confirmed the penalty. 4. That the appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises. 3. As the issues raised in these six appeals are common these were heard together and being disposed off by this common order for the sake of convenience and brevity. 4. Briefly stated facts as culled out from the records are that the assessee is an individual and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere appropriately disclosed in the books of M/s Bio-Medics, were only excluded. Further notices u/ s 143(2) and questionnaire u/s 142(1) for the A.Y. 2008- 09 to AY 2014-15 were issued by the learned AO on 08.03.2016. During the course of assessment proceedings, the Appellant filed several written submissions providing information, explanations and documentation as required by the Learned Assessing Officer (In short Ld. AO ). Concluding the assessment proceedings the assessment order dated 30.03.2016 under section 143(3) r.w.s. 153C was passed accepting the income returned u/s 153C r.w.s 139 without any variation. The assessee in order to buy peace of mind offered the entire gross receipts in the said bank account were offered as additional income in the return even though the said bank account reflected various payments in the nature of expenditure. It is also important to note that the undisclosed bank account was in the name of the partnership firm and the income was offered in the hands of the appellant. This additional income was offered to avoid any penal proceedings in this regard. Moreover, the said additional income was duly offered in the return filed in response to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perusal of the penalty show cause notices issued u/ s 274 of the Act will show that it was mentioned have concealed the particulars of income or furnished inaccurate particulars of such income thus the charge against the assessee for initiation of penalty was not specific. Copies of the notices are enclosed in the respective paper books. 7. In support of this contention Ld. Counsel for the assessee referred and relied on following judgments wherein it has been consistently held that when the charge itself is not specific, penalty cannot be levied . (i) T Ashok Pai V /s CIT (2007) 292 ITR 11 (SC)). (ii) CIT and Anr. V/s Manjunath Cotton Ginning Factory (2013) 359 ITR 565 (Karn.) (iii) Honourable Karnataka High Court in CIT V/s SSA S Emerald Meadows ITA No. 380/2015 dated 23.11.2015. (iv) Mahabir Prasad Agrawal V/s ACIT Kolkatta in IT No. 738 739/Kol/2013 dated 15.01.2016. (v) Hon ble Madhya Pradesh High Court in the case of Principal Commissioner of Income Tax v/s Kulwant Singh Bhatia dated 09.05.2018 (ITA 9 to 14 of 2018) (vi) Honourable ITAT Indore Bench in the case of Smt. Shruti Garg in IT A No. 988 to 1005/Ind/2016 vide order dated 28.06.2017. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e us and carefully gone through various judgments referred and relied by the Ld. Counsel for the assessee. Assessee has taken up the common issue in all these six bunches challenging the legality of the penalty proceedings initiated by issuance of notice u/s 274 r.w.s 271(1)(c) of the Act by contending that in the penalty notice no specific charge has been leveled against the assessee and the Ld.A.O has merely mentioned both the limbs i.e. concealed the particulars of income or furnished inaccurate particulars of income. To adjudicate this issue we will have to go through the impugned notice u/s 274 r.w.s. 271(1)(c) of the Act which has been placed in the paper book and have been separately issued for all the assessment years. No dispute has been raised on the part of the Departmental representative that similar notices have been issued for all the six assessment years i.e. from Assessment Year 2008-09 to 2013-14. We are therefore reproducing below the notice dated 30.3.2016 issued u/s 274 r.w.s. 271(1)(c) of the Act for Assessment Year 2008-09 placed at Page-13 of the paper book:- To, Shri Bansidhar Somani, Prop. M/s Bio-Medics 74, S.R. Compound, Dewas Naka, Indore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly, otherwise, principle of natural justice is offended if the show cause notice is vague . Even in the matter of search case where penalty is levied under Explanation 5A to Section 271(1)(c), it was held by the Hon ble Karnataka High Court that the show-cause notice under Section 274 was defective as it does not spell out the ground on which the penalty is sought to be imposed and consequently penalty imposed was cancelled. 14. The judgment in the case of CIT Vs. Manjunatha Cotton Ginning Factory(supra) was further followed by the Karnataka High Court in the case of CIT Vs. SSA'S Emerald Meadows, (2016) 73 taxman.com 248 (SC) dated 23.11.2015 (ITA 380/2015) wherein Hon ble High Court dismissed the appeal of the revenue by observing that the Tribunal has allowed the appeal of the assessee holding that the notice issued by the Assessing Officer under Section 274 read with Section 271(1)( c) of the Act of 1961 was bad-in-law as it did not specify which limb of Section 271(1)(c) of the Act of 1961, the penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars. The Tribunal while allowing the appeal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred proposition held by the Hon'ble Supreme Court in T Ashok Pai V/s CIT (2007) 292 ITR 11 (SC) and in CIT Vis SSAS Emerald Meadows (2016) 73 Taxmann.com 248 (SC) has also held the penalty levied u/ s 271(1)(c) as unsustainable in law as no specific charge was levied in the penalty show cause notice. 19. The ITAT Indore Bench in the case of group appeals of Keti Sangam Infrastructure (I) Ltd. and others ITA No 1343 601/Ind/2016 dated 27.06.2018 (authored by us) following the judicial precedents deleted the penalties levied u/s 271(1)(c) by stating that the assessing officer has not struck down the relevant charge from the sentence in the cyclostyled proforma of penalty show cause notice which means that the assessing officer was not sure as to on what ground he has initiated the penalty proceedings and in such a case the alleged notice is not sustainable in law. 20. We also find that in the recent decision authored by us in the case of Shri Varad Mehta ITA. No.693/Ind/2016 adjudicating the similar legal issue challenging the validity of the penalty proceedings initiated u/s 271(1)(c) of the Act for the alleged technical error and non application of mind by the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the alleged addition goes under the limb of concealment of particulars of income or furnishing inaccurate particulars of income . Merely issuing notice in general proforma will negate the very purpose of natural justice as held by the Hon'ble Apex Court in the case of Dilip N Shraf 161 Taxmann 218 that the quasicriminal proceedings u/s 271(1)(c) of the Act ought to comply with the principles of natural justice. 14. We therefore respectfully following above referred judgments and in the given facts and circumstances of the case are of the considered view that the alleged notice issued u/s 274 r.w.s. 271(1)(c) of the Act dated 31.12.10 is invalid, untenable and suffers from the infirmity of non application of mind by the Assessing Officer. We accordingly direct to delete the penalty of ₹ 16,00,000/- imposed u/s 271(1)(c) on this ground itself. We accordingly allow the additional ground raised by the assessee on the legality of the penalty proceedings initiated u/s 271(1)(c) of the Act. Since the penalty u/s 271(1)(c) also has been dealt on the preliminary points other arguments of the assessee dealing with the merits of the levy of penalty are not been deal ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
