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2019 (6) TMI 433

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..... furnished inaccurate particulars of income whereas the penalty has finally been levied in terms of Explanation-1 on account of concealment of income. Keeping in view the above findings and reasoning, we hold that the impugned penalty could not be sustained under law since AO has failed to specify that the exact charge in the show-cause notice and secondly, the penalty has been invoked for one limb but finally levied on another limb, which is not in accordance with law. The perusal of show-cause notice dated 26/02/2015 as placed on record reveal that neither the appropriate clause was marked nor appropriate lime was ticked, for which penalty proceedings were being initiated against the assessee. The assessee, in his submissions, drew attention to the aforesaid fact and stressed that the notice was bad in law. See SHRI SAMSON PERINCHERY [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] - Decided in favour of assessee. - I.T.A. No.4489/Mum/2017 - - - Dated:- 6-6-2019 - Shri Saktijit Dey, JM And Shri Manoj Kumar Aggarwal, AM For the Assessee : Shri Aliasgar Rampurwala Ld. AR For the Department : Shri Abhi Rama Kartikeyan-Ld.DR .....

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..... ng the year. Accordingly, penalty proceedings were initiated u/s 271(1)(c) against both additions for furnishing of inaccurate particulars of income. It has been submitted that the additions were accepted by the assessee and no further appeal has been preferred against the same. 4.1 During penalty proceedings, a show cause notice u/s 274 r.w.s 271(1)(c) was issued to the assessee on 26/02/2015 directing to assessee to defend the same. The assessee, vide reply dated 19/03/2015, inter-alia, submitted that the aforesaid notice did not specify the exact charge viz. concealing the particulars of income or furnishing of inaccurate particulars of income, for which the penalty was being initiated against the assessee and therefore, the notice was bad in law. Reliance was placed on the decision of Hon ble Karnataka High Court rendered in CIT Vs. Manjunatha Cotton Ginning Factory Others [359 ITR 565] and Ld. AO was requested to drop the penalty proceedings. On merits, it was submitted that the assessee had filed return of income based on unaudited financial statements. During the assessment proceedings, the assessee submitted audited financial statements and suo-mot .....

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..... Hon ble Supreme Court 291 ITR 519 5. Meherjee Cassinath Holdings P. Ltd. Vs ACIT Mumbai Tribunal 187 TTJ 722 6. Jayant B. Patel Vs ACIT Mumbai Tribunal ITA No. 1650/Mum/2017 The Ld. DR defended the same by placing reliance on the stand of Hon ble Supreme court rendered in Jain Brothers Vs Union of India 77 ITR 107 . 6.1 We have carefully heard the rival submissions and perused relevant material on record and deliberated on the judicial pronouncements as cited before us. The basic facts are not under dispute. It emerges that the assessee has revised its computation of income during assessment proceedings on the basis of audited financial statements which has resulted into certain additions in the hands of the assessee. Accordingly, penalty proceedings were initiated in the quantum assessment order for furnishing of inaccurate particulars o .....

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..... Explanation 1 is a deeming provision and is applicable only when an amount is added or disallowed in computation of total income which is deemed to represent the income in respect of which particulars have been concealed. Explanation 1 cannot be applied in a case where the assessee furnishes inaccurate particulars of income. Therefore, the action of Ld. AO in invoking the same for furnishing of inaccurate particulars of income would not stand the test of law. The facts of the present case would reveal that the penalty was initiated on the basis that the assessee has furnished inaccurate particulars of income whereas the penalty has finally been levied in terms of Explanation-1 on account of concealment of income. 6.4 Keeping in view the above findings and reasoning, we hold that the impugned penalty could not be sustained under law since Ld. AO has failed to specify that the exact charge in the show-cause notice and secondly, the penalty has been invoked for one limb but finally levied on another limb, which is not in accordance with law. 6.5 We find that the facts of the present case are squarely covered by the observation of Hon ble Bombay High C .....

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..... xman 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. 5. The grievance of the Revenue before us is that there is no difference between furnishing of inaccurate particulars of income and concealment of income. Thus, distinction drawn by the impugned order is between Tweedledum and Tweedledee. In the above view, the deletion of the penalty, is unjustified. 6. The above submission on the part of the Revenue is in the face of the decision of the Supreme Court in T. Ashok Pai v. CIT[2007] 292 ITR 11/161 Taxman 340 [relied upon in Manjunath Cotton Ginning Factory (supra)] - wherein it is observed that concealment of income and furnishing of inaccurate particulars of income in Section 271(1)(c) of the Act, .....

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