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TMI Blog2024 (6) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961 (hereinafter referred to as "the Act") dated 08.12.2021 and 17.03.2022 by the Assessing Officer, ACIT, Circle-40(1), New Delhi (hereinafter referred to as "ld. AO"). 2. Though the assessee has raised several grounds of appeal, the only effective issue to be decided in this appeal is as to whether the ld. NFAC was justified in confirming the levy of penalty u/s 271(1)(c ) of the Act in the facts and circumstances of the instant case. 3. We have heard the rival submissions and perused the materials available on record. We find that the assessee vide Ground No.1 had raised a preliminary objection that the show cause notice issued for penalty u/s 274 read with section 271(1)(c ) of the Act had not struck off the inappropriate portion as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulates that inappropriate words and paragraphs were to be deleted, but the same had not been done". Then, Dilip N. Shroff case (supra), 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. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... natural justice, it may also be held ultra vires Article 14 of the Constitution. 191. As a result, we hold that Dilip N. Shroff Case (supra) treats omnibus show-cause notices as betraying non-application of mind and disapproves of the practice, to be particular, of issuing notices in printed form without deleting or striking off the inapplicable parts of that generic notice. Conclusion: We have, thus, answered the reference as required by us; so we direct the Registry to place these two Tax Appeals before the Division Bench concerned for further adjudication." 4. In the instant case, on perusal of the penalty notice placed on record dated 30.12.2017, it is evident that the ld. AO had not struck off the irrelevant portion thereon ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0% of Conveyance and Travelling expenses on adhoc basis - Rs 3,58,650/- d) Disallowance of 20% of Communication expenses on adhoc basis - Rs 5,43,803/- e) Disallowance of 10% of Direct operational expenses on adhoc basis - Rs 5,25,487/- 8. Penalty proceedings u/s 270A of the Act stood initiated by the ld. AO for misreporting of income in respect of each of the aforesaid disallowances. A show cause notice u/s 274 read with section 270A of the Act was issued by the ld. AO on 19.12.2019 initiating penalty for under reporting of income in consequence of misreporting. 9. The aforesaid quantum assessment was accepted by the assessee by not preferring any further appeal before the ld. NFAC. 10. The ld. AO proceeded to levy penalty u/s 270A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted income. However, this would come into operation only when the ld. AO clearly mentions in the show cause notice itself as to which of the sub-clauses in sub-section (9) get attracted to the facts of the instant case. This is conspicuously absent in the show cause notice. In any case, the issue in dispute is no longer res integra in view of the decision of the Hon'ble Jurisdictional High Court in the case of Schneider Electric South East Asia (HQ) Pte Ltd vs ACIT in W.P.(C ) 5111/2022 & C.M. Nos. 15165-15166/2022 dated 28.3.2022 wherein it was held as under:- "6. Having perused the impugned order dated 09 March, 2022, this Court is of the view that the Respondents' action of denying the benefit of immunity on the ground that the pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance voluntarily estimated by the assessee. This court is conscious of the fact that there can be cases where underreporting of income may result in misreporting of income, however, in peculiar facts of the present case, the underreporting allegedly done by the assessee cannot amount to misreporting as the assessee had furnished all the details of the transactions relating to disallowance made under section 14A of the Act and the AO as well as assessee has used the same details to arrive at different conclusions i.e. differing quantum of disallowances under section 14A of the Act. This by no stretch of imagination can be held to be 'misreporting'. 8. This Court also finds that there is not even a whisper as to which limb of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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