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2019 (5) TMI 1053

otice u/s 274 read with section 271 issued in a mechanical manner without application of mind as the AO has not specified one the two limbs on which penalty was proposed to be levied - HELD THAT:- AO in not striking off the inappropriate limb in the notice and initiating the penalty on one limb and imposing penalty finally on the other limb is clear cut in violation of principle of natural justice as the assessee was deprived of reasonable opportunity to respond and deal with the particular charge on which the penalty was levied. In our view, the penalty order in such a scenario is clearly bad in law and can not be sustained. The case of the assessee is clearly supported by the decision relied upon by the assessee as stated hereinabove in t .....

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s not specified one the two limbs on which penalty was proposed to be levied. 3. The facts in brief are that the assessment was framed in this case vide order dated 06.12.2010 assessing the income at ₹ 24,91,180/- as against the return of income of ₹ 24,90,922/- wherein the AO assessed the profit of ₹ 24,90,922/- on sale of shares as business income as against the short term capital gain shown by the assessee besides disallowance of ₹ 32,922/- under section 14A read with rule 8D2(iii). The AO initiated the penalty proceedings as mentioned in page 6 of the assessment order for furnishing of inaccurate particulars of income and also notice dated 06.12.2010 was issued under section 274 read with section 271 of the Act w .....

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ous judicial forums. The ld AR contended that the order so framed is bad in law as the assessee was given proper opportunity to defend himself as the charge was not specifically confronted to the assessee. In defense of his arguments, the Ld. A.R. relied on the following case laws: • CIT vs. SSA's Emerald Meadows (SC) 73 taxmann.com 248 dated 5.8.2016 • Mrs. Piedade Perinchery (BomHC) ITANo. 1310 of 2014 dated 10.01.2017 • Shri Samson Perinchery vs. CIT (Bom HC ) 392 ITR 4 dated 05.01.2017 • CIT vs. SSA's Emerald Meadows (Kar HC) 73 taxmann.com 241 dated 23. 11. 20 15 • CIT vs. Manjunatha Cotton & Ginning Factory 35 taxmann.com 250 (Karnataka) • K.M. Bhatia vs. CIT 62 TAXMAN 430 (GUJ.) • CIT vs .....

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& Marble (P.) Ltd. vs. DCIT (Mumbai Trib.) dated 14.02.2018 Parinee Developers (P.) Ltd. vs. ACIT [2017] 88 taxmann.com 42 (Mumbai - Trib.) ITO vs. Roborant Investments (P) Ltd 7 SOT 181 (Mum ITAT) M/s Superb Royal Travels and Tours Pvt Ltd. vs. ITO - ITA No.: 4147/Mum/2012 DCIT vs. JMD Advisors Pvt. Ltd. 124ITD 223 (Delhi ITAT) Further, the Ld. A.R. submitted that no penalty is attracted under section 271(1)(c) for the disallowance made under section 14A of the Act as the assessee has disclosed all the particulars in the annual accounts filed before the revenue authorities. The Ld. A.R. relied on the decision of Pr. CIT vs. Gruh Finance Ltd. (2018) 100 taxman.com 104 SC and CIT vs. Reliance Petroproduct Pvt. Ltd. 322 ITR 158 SC. The L .....

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ing decisions: 1. Union of India vs. Dharmendra Textile Processors (2007) 295 ITR 244 2. RL Traders vs. ITO (2017-TIOL-2583-HC-DEL-IT) 3. CIT vs. Zoom Communication (P) Ltd. (191 taxman 179 (Delhi)/(2010) 327 ITR 510 (Delhi)/(2010) 233 CTR 465 4. CIT vs. Moser Baer India Ltd. (184 Taxman 8 (SC)/ (2009) 315 ITR 460 (SC)/(2009) 222 CTR 213 5. CIT vs. Gold Coin Health Food (P.) LTd. (172 Taxman 386 (SC)/(2008) 304 ITR 308 (SC)/(2008) 218 CTR 359) 6. MAK Data P. Ltd. vs. CIT (38 taxmann.com 448 (SC)/(2013) 358 ITR 593 (SC)/(2013) 263 CTR 1 7. B.A. Balasubramaniam & Bros. Co vs. CIT (116 Taxman 842, 236 ITR 977, 157 CTR 556) 8. CIT vs. Gates Foam & Rubber Co (91 ITR 467) 9. Steel Ingots Ltd. vs. CIT (296 ITR 228) 10. CIT vs. Escorts Fina .....

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ch the penalty was levied. In our view, the penalty order in such a scenario is clearly bad in law and can not be sustained. The case of the assessee is clearly supported by the decision relied upon by the assessee as stated hereinabove in the case of Shri Samson Perinchery vs. CIT (supra) and CIT vs. Mrs. Piedade Perinchery (Bom-HC) (supra) the Hon ble Bombay High Court has held that where the AO has failed to state particularly the one of the two limbs on which the penalty was proposed to be levied then the penalty order would be bad in law as the assessee was not given proper opportunity to respond to the charge on which the penalty was levied. The similar ratio has been laid down in the case of CIT vs. SSA SSA's Emerald Meadows (sup .....

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