TMI Blog2020 (10) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O under Sec.271(1)(c) is quashed in terms of our aforesaid observations. - Decided in favour of assessee. - ITA Nos.1166 & 1167/Mum/2019 - - - Dated:- 19-10-2020 - Shri Manoj Kumar Aggarwal, Accountant Member And Shri Ravish Sood, Judicial Member For the Appella : Shri Ja yesh D adiya, A.R For the Respondent : Shri V. Vinod Kumar, Sr. D.R ORDER PER RAVISH SOOD: The captioned appeals filed by the assessee are directed against the respective orders passed by the CIT(A)-9, Mumbai, dated 03.06.2015 and 21.02.2019, which in turn arises from the respective orders passed by the A.O under Sec. 271(1)(c) for A.Y 2012-13 and A.Y 2014-15. As the facts and the issue involved in the present appeals are inextricably interlinked and in fact interwoven, the same, thus, are being taken up and disposed off together by way of a consolidated order. We shall take up the appeal of the assessee for A.Y. 2012-13 as the lead year, and the order therein passed shall equally apply for the purpose of disposal of the appeal for A.Y. 2014-15. The assessee has assailed the impugned order on the following grounds of appeal before us: 1. The ld. CIT(A) has erred in law and on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was the property under consideration, therefore, the receipts from letting out/providing of amenities/furniture in respect of the property under consideration was also liable to be brought to tax under the head house property . However, in all fairness it was submitted by the assessee that the receipts from the provision of amenities/furniture under consideration may be brought to tax under the head other sources . Accepting the aforesaid request of the assessee the A.O therein brought the receipts from the letting out of amenities/furniture of ₹ 13,95,000/- to tax in the hands of the assessee under the head other sources . Further, the A.O while framing the assessment observed that the assessee had claimed a deduction of interest paid on borrowed capital of ₹ 18,24,287/- while computing its income under the head house property . On a perusal of the records, it was observed by the A.O that the assessee had purchased a property on 22.02.2005 for a consideration of ₹ 56,18,750/-. The assessee had raised a loan of ₹ 93,00,000/- from ICICI Bank on 08.06.2006, on which in interest of ₹ 9,97,034/- was paid during the year under consideration. Apart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot being persuaded to subscribe to the claim of the assessee, therein, vide his order passed under Sec.271(1)(c), dated 21.05.2015 imposed a penalty of ₹ 6,72,836/- under Sec.271(1)(c) for concealment of income/filing inaccurate particulars of income. 4. Aggrieved, the assessee assailed the penalty imposed by the A.O under Sec. 271(1)(c) of the Act before the CIT(A). In the course of the appellate proceedings the assessee assailed the sustainability of the penalty imposed under Sec.271(1)(c) both on the merits of the case, and also, the validity of the jurisdiction assumed by the A.O without putting the assessee to notice as regards the default for which the impugned penalty was proposed to be imposed in its hands. However, the CIT(A) not finding favour with the contentions advanced by the assessee both on merits as well as on the validity of the assumption of jurisdiction by the A.O, therein rejected the same and dismissed the appeal. 5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. We find that the assessee has assailed the validity of the order of the CIT(A) on two fold grounds viz. (i) that the CIT(A) had erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant default was merely a technical error, which by no means would lead to rendering the penalty imposed on the assessee as invalid in the eyes of law. As regards the merits of the case it was submitted by the ld. D.R that as the assessee had raised wrong claims in its return of income, therefore, it had rightly been subjected to penalty under Sec.271(1)(c) of the Act. 8. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities, material available on record, as well as the judicial pronouncements that had been pressed into service by them. As is discernible from the orders of the lower authorities, the A.O while culminating the assessment proceedings had initiated the penalty proceedings under Sec. 271(1)(c) for have concealed the particulars of your income or................furnished inaccurate particulars of such income . However, on a perusal of the SCN , dated 10.11.2014 issued under Sec. 274 r.w.s 271, we find that the A.O had called upon the assessee to show cause as to why penalty may not be imposed upon it for having concealed the particulars of its income OR furnishing inaccurate particulars of such income. Adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity but is a statutory obligation cast upon him, which we find had not been discharged in the present case as per the mandate of law. 10. We would now test the validity of the aforesaid Show Cause notice and the jurisdiction emerging therefrom in the backdrop of the judicial pronouncements on the issue under consideration. Admittedly, the A.O is vested with the powers to levy penalty under Sec. 271(1)(c) of the Act, if, in the course of the proceedings he is satisfied that the assessee had either concealed his income or furnished inaccurate particulars of his income . In our considered view as penalty proceedings are in the nature of quasi criminal proceedings, therefore, the assessee as a matter of a statutory right is supposed to know the exact charge for which he is being called upon to explain that as to why the same may not be imposed on him. The non specifying of the charge in the Show cause notice not only reflects the non-application of mind by the A.O, but in fact, defeats the very purpose of giving a reasonable opportunity of being heard to the assessee as envisaged under Sec. 274(1) of the I.T Act. We find that the fine distinction between the said two defaults ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distinct defaults which operate in their exclusive and independent fields, we, therefore, are unable to subscribe to the view taken by the CIT(A) that the A.O had validly imposed penalty for concealment of income/ filing inaccurate particulars of income in respect of the aforesaid two fold addition/disallowance made in the hands of the assessee. Be that as it may, the fact that the A.O vide his SCN , dated 10.11.2014 had failed to put the assessee to notice as regards the default for which it was called upon to explain as to why penalty u/s 271(1)(c) may not be imposed on it, in our considered view, would suffice to divest the A.O from valid assumption of jurisdiction for imposing penalty under the said statutory provision. Our aforesaid view is fortified by the judgment of the Hon ble High Court of Karnataka in the case of CIT Vs. SSA s Emerald Meadows (73 taxmann.com 241)(Kar) , wherein following its earlier order in the case of CIT Vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Kar) the High Court had held that where the notice issued by the A.O under Sec. 274 r.w Sec. 271(1)(c) does not specify the limb of Sec. 271(1)(c) for which the penalty proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at, as the two defaults viz. concealment of income and furnishing of inaccurate particulars of income as contemplated in Sec.271(1)(c) are separate and distinct defaults which operate in their exclusive and independent fields, we, therefore, are unable to subscribe to the view taken by the CIT(A) that the A.O had validly imposed penalty for concealment of income/filing inaccurate particulars of income in respect of the aforesaid addition/disallowance made in the hands of the assessee. We thus in the backdrop of our aforesaid observations not being able to persuade ourselves to subscribe to the imposition of penalty by the A.O, therefore, set aside the order of the CIT(A) who had upheld the same. The penalty of ₹ 6,72,836/- imposed by the A.O under Sec.271(1)(c) is quashed in terms of our aforesaid observations. 12. As the penalty imposed on the assessee company under Sec. 271(1)(c) of the Act has been quashed by us in terms of our aforesaid observations, we thus, refrain from adverting to and adjudicating the merits of the case. 13. The appeal of the assessee is allowed in terms of our aforesaid observations. ITA No.1167/Mum/2019 A.Y. 2014-15 14. As the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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