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TMI Blog2022 (8) TMI 1532X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiated for concealment of particulars of income or for furnishing inaccurate particulars of such income. 3. The ld. CIT (A) has erred in deleting the penalty levied u/s. 271(1)(c) by overlooking the jurisdictional Madras High Court in the case of Sundaram Finance Limited 403 ITR 407 wherein the Court had held that non-striking of relevant limb in the penalty notice cannot invalidate the penalty proceedings against the assessee. 4. The ld. CIT (A) ought to have upheld the levy of penalty as both the limbs of the penalty u/s. 271(1)(c) i.e., concealment of particulars of income and furnishing inaccurate particulars are applicable in the instant case. 5. The ld. CIT (A) ought to have appreciated the fact that but for the reopening of assessment, the property transaction would not have been brought to tax during the AY:2009-10 and also the ld. CIT (A) in the earlier quantum order has sustained the capital gains addition at Rs. 6,39,76,479/-. 6. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT (A) may be set aside and that of the Assessing Officer be restored. 3. None appeared for the assessee. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(1)(c) is initiated separately for concealment of income or for providing inaccurate particulars of income' On merits, the CIT(A)'s concluded that.. a. The assessee seems to have been in two minds with respect to the year of incidence of capital gain since the agreement which it entered into during the year was an unregistered document and hence had no evidentiary value under the Transfer of Property Act-18 82 b. The assessee was ill-advised and could not take a decision with respect to the year of liability of capital gains c. The transaction was very complex. d. It is heartening and surprising to note that both department as well as the assessee has accepted the order of the CIT (A) on quantum addition B. Submission of the Department: a. On irregularity in issuance of notice: In the case of the assessee there was only a single issue, i.e. Incidence of capital gain on sale of land irrevocable agreement it entered into for transfer of 2.27 acre of land to M/s True Value Homes Pvt. Ltd. Based on this irrevocable agreement, assessee received substantial part of the agreed amount as advance and had given possession of the property during the year itsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 565), held the notice issued is bad in law and holding the Penalty proceedings initiated is null and void. CIT (A) 's failed to take in to note the Jurisdictional High Court decision in the case of M/s Sundaram Finance Limited as reported in 403 ITR 407, which clearly spelt what need to be looked into is not whether there was defect in the notice but whether such defect in the communication notice has led to creation of confusion in the mind of the recipient and thus violation of Principles of Natural justice for effective representation of its case. It may be brought to your notice that the case law citied above, the Jurisdictional High Court has taken into account the case decision of Karnataka High court in the case of Manjunatha Cotton mills and others before arriving at this conclusion. b. On merits: CIT(A) was naive in accepting the assessee's plea that it was confused on the actual year in which the incidence of capital gain would arise. He failed to note that the Department initiated proceedings u/s 147 in the financial year 2015-16 and the assessee filed its return in response to notice in the late part of the financial year 2016-17. If the assessee was so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause for imposing penalty, that he had furnished correct particulars and that the allegation made against him was erroneous. 12. The Assessing Officer, by order dated 28.9.2016, did not accept the explanation offered by the assessee and levied penalty of Rs. 50 lakhs. Aggrieved by the same, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals)-2, Chennai [for short, the CIT(A)], who dismissed the appeal by order dated 30.6.2017. Challenging the same, the assessee preferred an appeal before the Tribunal, which was rejected by the impugned order. This is how the assessee is before us by way of this appeal. 13. The first aspect to be considered is as to whether the notice issued under Section 271(1)(c) of the Act dated 30.3.2016 is legally valid and proper. Admittedly, the notice did not specifically mention as to whether the assessee concealed particulars of his income or furnished inaccurate particulars or both. 14. Such notices, which did not specify as to which limb of Section 271(1)(c) of the Act would get attracted, were held to be bad in law in the decision of the Karnataka High Court in the case of CIT Vs. Manjunatha Cotton and Ginning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter. Accordingly, substantial question of law no. III is answered by holding that since the show cause notice dated 12-2-2008 does not indicate whether there was concealment of particulars of income or furnishing of incorrect particulars of such income, the same would vitiate the penalty proceedings." Unquote. 4.4 Thus, the Hon'ble jurisdictional High Court and other Hon'ble High Courts have held that notice was defective if the appropriate words, which were not applicable, were not struck off. In this case, it is observed that the Ld.CIT (A) has verified from the case records the impugned notice and gave the findings that the relevant portion was not struck off. The relevant part of the Ld.CIT(A)'s order is reproduced as under: "The assessment folder was also called for in this case and it was seen that the penalty notice did not contain the strike off between and/or with respect to the two limbs of levy of penalty. The assessment order passed had also mentioned 'penalty proceedings u/s. 271(1)(c) is initiated separately for concealment of income or for providing inaccurate particulars of income". The Ld.DR has not rebutted these findings of the Ld.CIT(A). Therefore, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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