TMI Blog2020 (1) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... for the A.Y. 2013-14 and A.Y.2014-15. Penalty u/s. 271AAB - no search has been initiated u/s. 132 - HELD THAT:- As perused the Assessment Orders for the A.Y. 2013-14 and A.Y. 2014-15 and found that search and seizure operation was conducted u/s. 132 of the Act on 11.11.2014 on M/s. Geochem Laboratories Pvt. Ltd., based on which the assessments were framed in assessee s case and nowhere in the Assessment Orders passed for the A.Y. 2013-14 and A.Y.2014-15 u/s.153C of the Act, it has been mentioned that search was initiated in assessee s case. We also observed that penalty proceedings were initiated u/s. 271(1)(c) of the Act for the A.Y. 2013-14 and A.Y. 2014-15 in assessee case. Therefore levy of penalty u/s.271AAB the first and foremost condition to be satisfied is that search u/s. 132 of the Act should have been initiated on the assessee for invoking the provisions of section 271AAB of the Act and levying penalty under this provision. Similar view has been taken by various Tribunals as referred to above. In the case before us since there was no search and seizure operation initiated u/s. 132 of the Act, the penalty proceedings initiated u/s. 271AAB as against the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the inappropriate limb in the notice was not strike off. Ld. Counsel for the assessee referring to the assessment order submitted that the Assessing Officer stated that penalty proceedings were initiated for furnishing inaccurate particulars and concealment of income. Referring to the notice and Penalty Order, Ld.Counsel for the assessee submitted that Assessing Officer did not specify charge for which the penalty proceedings were initiated but in the penalty order penalty was levied for furnishing inaccurate particulars of income and for concealment of income within the meaning of the section 271(1)(c) of the Act and therefore, the initiation of penalty proceedings itself is improper and not valid. Ld. Counsel for the assessee submitted that there is complete non-application of mind by the Assessing Officer in initiating penalty proceedings and therefore, levy of penalty is illegal, void, bad in law, initiated by non-application of mind and is without jurisdiction as the penalty notice issued by the Assessing Officer does not strike off the irrelevant portion thereon. 5. Reliance was placed on the following decisions: - (i) Samson ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U/s. 271(1)(c) of the Act the Assessing Officer records that it is a fit case for levy of penalty u/s. 271(1)(c) of the Act for furnished inaccurate particulars of income leading to concealment of income. 8. An identical situation has been considered by the Coordinate Bench in Meherjee Cassinath Holdings v. ACIT in ITA.No. 2555/MUM/2012 dated 28.04.2017 as to whether the action of the Assessing Officer in initiating penalty proceedings U/s. 271(1)(c) of the Act without striking off one of the limbs and without specifying the specific charge in the notice initiating penalty proceedings for inaccurate particulars of income in the assessment order and the Coordinate Bench considering the decision of the Hon ble Jurisdictional High Court in the case of CIT v. Samson Perinchery [392 ITR 4] and also various decisions held that action of the Assessing Officer in non-striking off relevant clause in the notice shows that the charge being made against the assessee is not firm therefore proceedings suffer from non-compliance with principles of natural justice in as much as the Assessing Officer himself is not sure of the charge and the assessee is not made aware as to which o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to why it should not be done. Mere mistake in the language used or mere non-striking of the inaccurate portion cannot by itself invalidate the notice. The entire factual background would fall for consideration in the matter and no one aspect would be decisive. In this context, useful reference may be made to the following observation in the case of CIT v. Mithila Motor's (P.) Ltd. [1984] 149 ITR 751 (Patna) (head note): Under section 274 of the Income-tax Act, 1961, all that is required is that the assessee should be given an opportunity to show cause. No statutory notice has been prescribed in this behalf. Hence, it is sufficient if the assessee was aware of the charges he had to meet and was given an opportunity of being heard. A mistake in the notice would not invalidate penalty proceedings. In M/s Maharaj Garage Co. (supra), the Hon ble Bombay High Court at para 15 held: The requirement of section 274 of the Income Tax Act for granting reasonable opportunity of being heard in the matter cannot be stretched to the extent of framing a specific charge of asking the assessee an explanation in respect of the quantum o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tidevi Mahavir Prasad Gupta (supra), the Tribunal held as under: 10. The question before us is not whether the income is of the nature of notional income but the question is whether the assessee has filed inaccurate particulars or concealed the true facts. As stated hereinabove, in our humble opinion, the assessee has concealed the true facts thereby filed inaccurate particulars. Therefore, we do not find any error or infirmity in the findings of the Ld. CIT(A). The penalty u/s. 271(1)(c) is leviable on the facts of the case. The reliance on the decision of the Tribunal is clearly distinguishable on the facts. We, accordingly confirm the levy of penalty u/s. 271(1)(c) of the Act. In Ms. Laudres Austin (supra), the Tribunal held the following: In the instant case also we hold that penalty proceedings were initiated properly as there is no defect in the recording of satisfaction by the AO as well there is no defect in the notice issued u/s 271 r.w.s. 274 of the 1961 Act. The decision of Hon ble Bombay High Court in Samson Perincherry (supra) is concerning the issuance of penalty proceedings under one limb while levying of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to only one of the two breaches mentioned under Section 271(1)(c) of the Act, for initiation of penalty proceedings will not warrant/permit penalty being imposed for the order breach. This is more so, as an Assessee would respond to the ground on which the penalty has been initiated/notice issued. It must, therefore, follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the assessee has no notice. Respectfully following the ratio laid down in Dilip N. Shroff (supra) and Samson Perincherry (supra), we hold that the penalty proceedings initiated by the AO is bad in law. We may herein observe that since the order of the AO has been held as bad in law on the preliminary ground, the other grounds raised by the revenue on merits before us having been rendered as academic, are thus not being dealt with. 10. The Hon'ble Telangana and Andhra Pradesh High Court in the case of Pr. CIT v. Smt Baisetty Revathi [398 ITR 88 (T AP)] held as under: 7. Perusal of the order reflects that the assessee did not raise the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is the specific allegation which forms the basis for the proposed penalty. 10. A copy of the proforma notice under Section 271 read with Section 274 of the Act of 1961 addressed to the assessee on 22.03.2013 is produced. Perusal thereof reflects that the irrelevant contents therein, which had no application to the assessee, were struck out leaving only one clause which reads as under: Whereas in the course of proceedings before me for the Assessment Year 2010-11 it appears to me that you have concealed the particulars of your income or furnished inaccurate particulars of such income. 11. It would be apposite at this stage to consider the judgment of the Karnataka High Court in M/s. Manjunatha Cotton And Ginning Factory. Therein, a Division Bench of the Karnataka High Court observed that Section 271 of the Act of 1961 is a specific provision providing for imposition of penalties and is a complete code in itself regulating the procedure for such imposition. The Bench therefore held that penalty proceedings have to be conducted in accordance therewith, subject always to the rules of natural justice. It was pointed out that S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be struck down. 13. Smt.Kiranmayee, learned counsel, placed reliance on the judgment of the Supreme Court in K.P.Madhusudhanan v/s. CIT [251 ITR 99 (SC)]. Therein, the Supreme Court held that it is not necessary for the Assessing Officer, while issuing a notice under Section 271(1)(c), to expressly invoke Explanation 1(B) appended to the provision. It is however relevant to note that Explanation 1(B) merely adverts to a case of failure of an assessee to substantiate the explanation offered whereby the amount added or disallowed while computing the total income of such person for the purposes of the penalty provision shall be deemed to represent the income in respect of which particulars had been concealed. The Supreme Court observed that the statutory provision included the Explanation and once the assessee was put on notice, no express invocation of the Explanation is necessary. 14. This judgment has no application to the case on hand as what we are concerned with presently is whether the assessee is required to be put on notice as to whether she is to be penalized for concealment of particulars of income or for furnishing inaccurate particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice is further compounded presently by the confused finding of the Assessing Officer that he was satisfied that the assessee was guilty of both. 18. We are therefore of the opinion that the order under appeal does not brook interference on any ground. We find no question of law, much less a substantial one, arising for consideration warranting admission of this appeal. 11. Recently the Hon'ble Bombay High Court in the case of the PCIT v. Goa coastal Resorts and Recreation Pvt. Ltd., in Tax Appeal No.24 of 2019 order dated 11.11.2019, held as under: - 3. Ms Razaq, learned Advocate submits that in this case the revised returns filed by the respondents indicated that the disclosures were made only by piecemeal. Relying upon Mak Data (P.) Ltd v/s. Commissioner of Income Tax 1 , she submits that such disclosure does not relieve the assessee of the requirement of paying penalty. He submits that the assessment order in the present case makes reference to concealment and/or inaccurate particulars. In this view of the matter, she submits that the substantial questions of law as aforesaid will be arises and the view taken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is perused, it is apparent that the relevant portions have not been struck off. This coupled with the fact adverted to in paragraph (5) of this order, leaves no ground for interference with the impugned order. The impugned order are quite consistent by the law laid down in the case of Samson Perinchery and New Era Sova Mine(supra) and therefore, warrant no interference. 8. The contention based upon MAK Data (P.) Ltd.(supra) also does not appeal to us in the peculiar facts of the present case. The notice in the present case is itself is defective and further, there is no finding or satisfaction recorded in relation to concealment or furnishing of inaccurate particulars. 12. Facts being identical, respectfully following the ratio of the above said decisions, we hold that the notice issued by the Assessing Officer U/s. 274 r.w.s 271(1)(c) of the Act is on account of non-application of mind and therefore the penalty proceedings initiated are bad in law. Thus, we direct the Assessing Officer to delete the penalty levied U/s. 271(1)(c) of the Act for both these appeals for the A.Y. 2013-14 and A.Y.2014-15. 13. As we have held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly supported the orders of the Authorities below. 19. We have heard the rival submissions, perused the orders of the authorities below. In this case on a reading of the Assessment Order passed u/s. 143(3) of the Act for the A.Y. 2015-16 it is observed that search and seizure operation u/s. 132(1) was conducted on M/s.Geochem Laboratories Pvt. Ltd., on 11.11.2014. Consequent to this search operation the case of the assessee was also centralized with DCIT-(5)(1) for the purpose of assessments. The Assessing Officer completed the assessment u/s. 143(3) of the Act by making disallowance u/s. 14A r.w. Rule 8D and also interest on service tax. In the course of the assessment proceedings the Assessing Officer accepted the revised computation filed by the assessee reducing the WDV block of assets consequent to the adjustments made in the A.Y.2013-14 and A.Y. 2014-15. Assessing Officer also initiated penalty proceedings u/s. 271AAB of the Act and subsequently passed penalty order on 31.05.2017 levying penalty of ₹.2,83,200/- u/s. 271AAB(1)(c) of the Act. The penalty was sustained by the Ld.CIT(A). 20. The provisions of section 271AAB read as under: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty order passed on 31.05.2017 u/s. 271AAB of the Act and found that the search and seizure operation u/s. 132 of the Act was conducted on M/s.Geochem Laboratories Pvt. Ltd., on 11.11.2014 and no where it is mentioned either in the assessment order or in the penalty order that search and seizure was initiated u/s. 132 of the Act in assessee s case. We have also perused the Assessment Orders for the A.Y. 2013-14 and A.Y. 2014-15 and found that search and seizure operation was conducted u/s. 132 of the Act on 11.11.2014 on M/s. Geochem Laboratories Pvt. Ltd., based on which the assessments were framed in assessee s case and nowhere in the Assessment Orders passed for the A.Y. 2013-14 and A.Y.2014-15 u/s. 153C of the Act, it has been mentioned that search was initiated in assessee s case. We also observed that penalty proceedings were initiated u/s. 271(1)(c) of the Act for the A.Y. 2013-14 and A.Y. 2014-15 in assessee case. Therefore, we are of the view that for levy of penalty u/s.271AAB of the Act, the first and foremost condition to be satisfied is that search u/s. 132 of the Act should have been initiated on the assessee for invoking the provisions of section 271AAB of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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