TMI Blog2019 (2) TMI 1406X X X X Extracts X X X X X X X X Extracts X X X X ..... - Appeal of the assessee is partly allowed. Validity of the order passed under section 271(1)(c) - HELD THAT:- When the AO has not specified the limb for initiation of penalty proceedings under section 271(1)(c), the same is bad in law and accordingly the impugned order passed under section 271(1)(c) is not sustainable in law and liable to be quashed. - ITA No. 691 & 692/JP/2018 - - - Dated:- 25-10-2018 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri P.C. Parwal (CA) For the Revenue : Shri Raj Mehra (JCIT) ORDER PER VIJAY PAL RAO, JM : These two appeals by the assessee are directed against two separate orders of ld. CIT (A) dated 12.03.2018 and 27.04.2018 arising from assessment order passed under section 143(3) and penalty order passed under section 271(1)(c) respectively for the assessment year 2013-14. First, we take up the quantum appeal in ITA No. 692/JP/2018 wherein the assessee has raised the following grounds :- 1. The ld. CIT (A) has erred on facts and in law in confirming the action of AO in applying n.p. rate of 5% on unrecorded sales of ₹ 2,09,30,560/-, thereby sustaining addition of ₹ 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared by the assessee for the year under consideration as well as in the preceding year may be considered. 4. On the other hand, the ld. D/R has submitted that for the assessment year 2011-12 the AO made the addition by adopting 8% NP which was restricted by the ld. CIT (A) to 5% NP on the total sales/turnover. The assessee has accepted the order of the ld. CIT (A) for the assessment year 2011-12 and, therefore, the AO was reasonable in adopting the same NP of 5% on the unaccounted sales. He has relied upon the orders of the authorities below. 5. We have considered the rival submissions as well as the relevant material on record. There is no dispute that there was unaccounted sales found by the AO in the shape of deposits made in the savings bank account with Indusind Bank not disclosed in the regular books of account. The AO has applied NP at 5% on the unaccounted sales which was confirmed by the ld. CIT (A) in para 5.3 and 5.4 of the impugned order as under :- 5.3. I have gone through the assessment order as well as submissions made by the appellant. Following facts have emerged : 1. That the appellant is dealing in trade of Kirana Grain items. 2. That the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raves to amend, alter and modify any of the grounds of appeal. 4. Necessary cost be allowed to the assessee. Ground No. 1 is challenging the validity of the order passed under section 271(1)(c) of the IT Act. 7. The ld. A/R of the assessee has submitted that the AO has initiated the penalty proceedings without specifying the limb whether it was for concealment of particulars of income or furnishing inaccurate particulars of income. The ld. A/R has referred to the assessment order wherein the AO has initiated the penalty proceedings without specifying the default of concealment or furnishing inaccurate particulars of income. The ld. A/R has also filed a copy of show cause notice dated 8th March, 2016 issued under section 274 read with section 271 of the IT Act and submitted that even in the show cause notice, the AO has not specified the limb for which the penalty was proposed to be levied. Therefore, the initiation of penalty proceedings are not valid and consequently order passed by the AO under section 271(1)(c) is liable to be quashed. In support of his contention, he has relied upon the decision of Hon ble Supreme Court in case of CIT vs. SSA s Emerald Meadows, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, consequent levy of penalty by the AO is illegal and bad in law, we refer to the penalty notice dated 18.03.2013 which talks about assessee concealing the particulars of income or furnishing inaccurate particulars of income. The notice doesn t specify the exact charge against the assessee as to whether it relates to concealing the particulars of income or furnishing inaccurate particulars of income. The subsequent notice dated 17.08.2015 is against silent on the exact charge against the assessee. It is a settled position in law that the imposition of penalty under section 271(1)(c) is invited when the conditions specified therein are satisfied and further, the two expressions concealing the particulars of income and furnishing inaccurate particulars of income denote different connotations. It is therefore imperative that the assessee be made aware as to which of the two charges, he is required to submit his defence and supportive arguments. In the instant case, as we have noted above, the notice talks about both the charges and it doesn t convey to the assessee as to which charge he has to respond. The notice thus demonstrate nonapplication of mind on the part of the AO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court. Further, we note that the Hon ble Bombay High Court in case of Shri Samson Perinchery (in ITA No. 1154 and others dated 5.01.2017) and Karnataka High Court in its latest decision in case of S. Chandrashekhar (Supra) has reaffirmed the said legal proposition. 18. In light of above legal authorities where the factum of non-striking off of the irrelevant clause in the notice has been held as reflective of non-application of mind by the AO and in light of facts and circumstances of the present case and the above discussions, the penalty imposed under section 271(1)(c) is liable to be deleted. Accordingly, having regard to the facts and circumstances, when the AO has not specified the limb for initiation of penalty proceedings under section 271(1)(c), the same is bad in law and accordingly the impugned order passed under section 271(1)(c) is not sustainable in law and liable to be quashed. We order accordingly. Since we have quashed the penalty order passed under section 271(1)(c), therefore, we do not propose to go into the other grounds raised by the assessee on the merits on levy of penalty. 10. In the result, appeal of the assessee in ITA No. 692/JP/2018 is p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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