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TMI Blog2024 (4) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... olves a delay of 6 days, therefore, Shri Y.K Mishra, the Ld. Authorized Representative (for short 'AR') had at the threshold of hearing of the appeal taken us through an application for condonation of delay a/w. "affidavit" dated 06.10.2023. Elaborating on the reasons leading to the aforesaid delay, the Ld. AR submitted that the assessee belongs to a tribal community and is living in a remote area. It was stated by the Ld. AR that due to some health issues of the assessee's son Shri Jayant Kujur who looks after her business, the delay had occasioned in filing of the present appeal before the Tribunal. The Ld. AR submitted that as the delay in filing of the appeal had occasioned due to bonafide reasons, therefore, the same in all fairness be condoned. 3. Per contra, the Ld. Departmental Representative (for short 'DR') did not seriously object to the seeking of condonation of delay involved in the filing of the appeal by the assessee applicant. 4. Considering the fact that due to health issues of the assessee's son, viz. Shri Jayant Kujur, the appeal could not be filed within the prescribed period before the Tribunal, we find substance in the contention advanced by the Ld. AR that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty u/s. 271(1)(c) of the Act, therefore, we shall first deal with the same. 11. As is discernible from the record, though the A.O. while framing the assessment vide his order passed u/s. 147 r.w.s. 144 r.w.s. 144B of the Act dated 24.09.2021 had initiated penalty proceedings u/s. 271(1)(c) of the Act in the case of the assessee for "furnishing of inaccurate particulars of income", but in the penalty order passed u/s. 271(1)(c) of the Act dated 01.02.2022, at Para 10, he had mentioned that the assessee has deliberately furnished inaccurate particulars of income as well as concealed the particulars of income. Apart from that, a perusal of the copy of the "Show Cause Notice" (SCN) issued u/s. 274 r.w.s. 271(1)(c) of the Act dated 24.09.2021 reveals that the assessee was called upon to explain why penalty u/s. 271(1)(c) of the Act may not be imposed upon her for having "concealed the particulars of income". For the sake of clarity, the SCN dated 24.09.2021 is culled out as under: 12. We would now test the validity of the aforesaid "Show Cause" notice dated 24.09.2021, and the jurisdiction emerging therefrom in the backdrop of the judicial pronouncements on the issue under consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciples of natural justice [See Malabar Industrial Co. Ltd. Vs. CIT (2000) 2 SCC 718]. In the present case, we find that though the A.O. in the penalty order passed u/s. 271(1)(c) of the Act dated 01.02.2022 had mentioned both the limbs by stating that the assessee had "furnished inaccurate particulars of income" as well as "concealed the particulars of income", but the penalty notice issued u/s. 274 r.w.s. 271(1)(c) of the Act dated 24.09.2021 reveals that the assessee was called upon to explain why penalty u/s. 271(1)(c) of the Act may not be imposed upon him for having "concealed the particulars of income". We are of the 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, and not overlapping, therefore, the AO had grossly erred, wherein he vide the SCN, dated 24.09.2021 had on one hand called upon the assessee to explain as to why penalty u/s 271(1)(c) may not be imposed on her foe having "concealed the particulars of income", but thereafter had vide his penalty order u/s. 271(1)(c) of the Act, dated 01.02.2022 visited the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been taken by the Hon'ble High Court of Bombay in the case of CIT Vs. Samson Perinchery (ITA No. 1154 of 2014; Dt. 05.01.2017)(Bom). The Hon'ble High Court relying on the judgment of the Hon'ble High Court of Karnataka in the case of Manjunathja Cotton and Ginning Factory (supra), which in turn had relied on the judgment of the Hon'ble Apex Court in T. Ashok Pai Vs. CIT, 292 ITR 1 (SC) had approved the order of the Tribunal that had deleted the penalty u/s 271(1)(c) imposed by the A.O and had, inter alia, observed, that the failure of the AO to strike-off the irrelevant default in the notice issued under Sec. 274 of the Act which is in a standard proforma clearly indicates a non-application of mind by the A.O while issuing the notice. Further, we find that the Hon'ble High Court of Bombay in the case of Pr. CIT (Central), Bengaluru Vs. Golden Peace Hotels & Resorts (P) Ltd. (2021) 124 tamnn.com 249 (SC), by drawing support from its earlier order in the case of CIT Vs. Shri Samson Perinchery (2017) 392 ITR 4 (Bom) and PCIT Vs. New Era Sova Mine (2020) 420 ITR 376 (Bom), had observed that AO while issuing show-cause should clearly indicate that as per him the case of the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd for interference with the impugned order. The impugned order is quite consistent with the law laid down in the case of Samson Perinchery and New Era Soya Mine (supra) and therefore, warrants no interference." The Special Leave Petition (SLP) filed by the revenue against the aforesaid order had thereafter been dismissed by the Hon'ble Apex Court in Pr. CIT (Central) Vs. Golden Peace Hotels and Resorts (P) Ltd. (2021) 124 taxmann.com 249 (SC). Also, the "Full bench" of the Hon'ble High Court of Bombay in the case of Mohd. Farhan A. Shaikh V. DCIT, Central Circle-1, Bengaluru (2021) 280 Taxman 334 (Bombay), had observed that where the assessment order clearly records a satisfaction for imposing penalty on one or other; or both grounds mentioned in Sec. 271(1)(c), but there is a defect in the SCN, wherein the AO had failed to strike-off the irrelevant default, then, the same would vitiate the penalty proceedings. The Hon'ble High Court while concluding as hereinabove had held as under: "173. We, however, accept that the Revenue, often, adopts a pernicious practice of sending an omnibus, catch-all, printed notice. It contains both relevant and irrelevant information. It assumes, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the precise charge in the penalty proceedings not only from the statutory note but from every other source of information, such as the assessment proceedings. That said, first, penalty proceedings may originate from the assessment proceedings, but they are independent; they do not depend on the assessment proceeding for their outcome. Assessment proceedings hardly influence the penalty proceedings, for assessment does not automatically lead to a penalty 176. Second, not always do we find the assessment proceedings revealing the grounds of penalty proceedings. Assessment order need not contain a specific, explicit finding of whether the conditions mentioned in section 271(1)(c) exist in the case. It is because Explanations 1(A) and 1(B), as the deeming provisions, create a legal fiction as to the grounds for penalty proceedings. Indeed, the Apex Court in CIT v. Atul Mohan Bindal [ 73], has explained the scope of section 271(1)(c) thus: "[Explanation 1, appended to section 27(1) provides that if that person fails to offer an explanation or the explanation offered by such person is found to be false, or the explanation offered by him is not substantiated, and he fails to prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is better than cure. Answers: Question No.1: If the assessment order clearly records satisfaction for imposing penalty on one or the other, or both grounds mentioned in Section 271(l)(c), does a mere defect in the notice-not striking off the irrelevant matter- vitiate the penalty proceedings? 181. It does. The primary burden lies on the Revenue. In the assessment proceedings, it forms an opinion, prima facie or otherwise, to launch penalty proceedings against the assessee. But that translates into action only through the statutory notice under section 271(1)(c), read with section 274 of IT Act. True, the assessment proceedings form the basis for the penalty proceedings, but they are not composite proceedings to draw strength from each other. Nor can each cure the other's defect. A penalty proceeding is a corollary; nevertheless, it must stand on its own. These proceedings culminate under a different statutory scheme that remains distinct from the assessment proceedings. Therefore, the assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 182. More particularly, a penal p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtions of the printed notices are not struck off ? 187. In Dilip N. Shroff, for the Supreme Court, it is of "some significance that in the standard Pro-forma used by the assessing officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done". Then, Dilip N. Shroff, on facts, has felt that the assessing officer himself was not sure whether he had proceeded on the basis that the assessee had concealed his income or he had furnished inaccurate particulars. 188. We may, in this context, respectfully observe that a contravention of a mandatory condition or requirement for a communication to be valid communication is fatal, with no further proof. That said, even if the notice contains no caveat that the inapplicable portion be deleted, it is in the interest of fairness and justice that the notice must be precise. It should give no room for ambiguity. Therefore, Dilip N. Shroff disapproves of the routine, ritualistic practice of issuing omnibus show-cause notices. That practice certainly betrays nonapplication of mind. And, therefore, the infraction of a mandatory procedure leading to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 433 ITR 268 (Bombay) relying upon its earlier orders in the case of, viz.(i). Goa Coastal Resorts & Recreation P. Ltd. (supra); (ii). Samson Perinchery (supra); and (iii). New Era Sova Mine (supra), had observed that recording of satisfaction by AO in relation to any concealment of income or furnishing of inaccurate particulars by the assessee in notice issued u/s 271(1)(c) is the sine qua non for initiation of such proceedings. Further, we find that the ITAT, Pune in Ashok Sahahakari Sakhar Karkhana Ltd. Vs. ACIT (2018) 99 taxman.com 374 (Pune), had held that where in a notice issued u/s 274 of the Act the AO had used conjunction "or" to mention both limbs, i.e, concealment of income or furnishing inaccurate particulars of income and charge for levy of penalty was not explicitly clear from notice, then, the same was to be held as bad in law and penalty was liable to be set-aside. On a similar footing was the view taken by the ITAT, Mumbai "B" Bench in ACIT Vs. Bhushan Kamanayan Vora (2018) 99 taxmann.com 373 (Mum). It was observed by the Tribunal that where the AO was not sure about the charge, i.e whether it was for concealment of income or furnishing of inaccurate particulars o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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