TMI Blog2021 (7) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... ng called upon to explain as to why penalty under Sec. 271(1)(c) may not be imposed on it. - Decided in favour of assessee. - ITA No.5403/MUM/2019 - - - Dated:- 16-6-2021 - Shri Rajesh Kumar (Accountant Member) And Shri Ravish Sood (Judicial Member) For the Assessee : Shri Vimal Punamiya, A.R For the Revenue : Shri Jitendra Kumar, D.R ORDER PER RAVISH SOOD, J.M: The present appeal filed by the assessee is directed against the order passed by the CIT(A)-38, Mumbai, dated 28.03.2019, which in turn arises from the order passed by the A.O under Sec. 271(1)(c) of the Income Tax Act, 1961 (for short Act ) dated, 28.06.2017 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) erred in confirming the penalty of ₹ 3,35,707/- under Sec. 271(1)(c) of the Income Tax, Act 1961. 2. The appellant craves leave to add further grounds or to amend or alter the existing grounds of appeal on or before the date of hearing. 2. Briefly stated, the assessee firm had e-filed its return of income for A.Y. 2014-15 on 14.09.2014, declaring a total income of Rs.nil. The return of income was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice as regards the default for which he was being called upon to explain as to why penalty may not be imposed on it, the latter, had remained divested of an opportunity of putting forth its case that no penalty could validly be imposed on it. On merits, it was submitted by the ld. A.R that the impugned disallowance of the property expenses of ₹ 10,86,430/- was backed by an inadvertent mistake on the part of the assessee at the time of compiling its return of income. It was submitted by the ld. A.R that as against the property expenses of ₹ 28,140/- the amount of ₹ 10,86,430/- was wrongly booked under the head administrative expenses by the assessee in its profit and loss account for the year under consideration. In order to buttress his aforesaid claim the ld. A.R took us through the bifurcated details of the administrative expenses at Page 11 of the APB. It was, thus, submitted by the ld. A.R that as the impugned disallowance of the property expenses was based on an inadvertent mistake on the part of the assessee, therefore, no penalty u/.s 271(1)(c) could have validly been imposed on it. In support of his aforesaid claim that penalty u/s 271(1)(c) cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent case by the A.O under Sec. 274 r.w. Sec. 271(1)(c), dated 07.12.2016 clearly reveals that there was no application of mind on the part of the A.O while issuing the same. We are of a strong conviction that the very purpose of affording a reasonable opportunity of being heard to the assessee as per the mandate of Sec. 274(1) would not only be frustrated, but would be rendered redundant, if an assessee is not conveyed in clear terms the specific default for which penalty under the aforesaid statutory provision was sought to be imposed. In our considered view, the indispensable requirement on the part of the A.O to put the assessee to notice as regards the specific charge contemplated under the aforesaid statutory provision, viz. concealment of income or furnishing of inaccurate particulars of income is not merely an idle formality, 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, dated 07.12.2016 and the jurisdiction emerging therefrom in the backdrop of the judicial pronouncements on the issue under consideration. Admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered view, that now when as per the settled position of law the two defaults viz. concealment of income and furnishing of inaccurate particulars of income are separate and distinct defaults, therefore, in case the A.O sought to have proceeded against the assessee for either of the said defaults, then, it was incumbent on his part to have clearly specified his said intention in the Show cause notice, which, we find he had failed to do in the case before us. The aforesaid failure on the part of the assessee cannot be characterised as a technical default, as the same has clearly divested the assessee of his statutory right of an opportunity of being heard and defend his case. 11. We find that the Hon ble High Court of Karnataka in the case of CIT Vs. SSA s Emerald Meadows (73 taxmann.com 241)(Kar) following its earlier order in the case of CIT Vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Kar) , has 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 had been initiated, i.e. whether for concealment of particulars of income or furnishing of i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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