SYMBYOSYS INTEGRATED SOLUTION PRIVATE LIMITED, MUMBAI V. INCOME TAX OFFICER 4(3)(4), MUMBAI

ITA 1166/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4708 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 01-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Bonafide belief; Wrong claim; Bonafide mistake; Set aside
• Section: 271(1)(c); 143(1); 274; 143(2); 73; 13

Judgement Text

ITA NO.1166 & 1167/MUM/2019 A.YS. 2012 - 13 & 2014 - 15 SYMBYOSYS INTEGRATED SOLUTIONS PVT. LTD. VS. INCOME TAX OFFICER - 4(3)(4) 1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI MANOJ KUMAR AG G ARWAL, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NOS.1166 & 1167/MUM/2019 (ASSESSMENT YEARS: 2012 - 13 & 2014 - 15) SYMBYOSYS INTEGRATED SOLUTIONS PVT.LTD. FLAT NO. 1217, MAKER CHAMBER V, NARIMAN POINT, MUMBAI 400021 VS. INCOME TAX OFFICER 4(3)(4) ROOM NO. 637, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400021 PAN AAGCS4206B (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI JAYESH DADIYA, A.R RESPONDENT BY: SHRI V. VINOD KUMAR, SR. D.R DATE OF HEARING: 15.10.2020 DATE OF PRONOUNCEMENT: 19 .10.2020 O R D E R 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 A ND 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 ASSESSE E FOR A.Y. 2012 - 13 AS THE LEAD YEAR, AND THE ORDER THERE IN 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 GROUND S OF APPEAL BEFORE US: ITA NO.1166 & 1167/MUM/2019 A.YS. 2012 - 13 & 2014 - 15 SYMBYOSYS INTEGRATED SOLUTIONS PVT. LTD. VS. INCOME TAX OFFICER - 4(3)(4) 2 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER WHICH IS MADE ON THE BASIS OF DEFECTIVE NOTICE AS THE ASSESSING OFFICER HAS NOT SPECIFIED UNDER WHICH LIMB PENALTY IS BEING INITIATED. 2. THE LD CIT (A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF ASSESSING OFFICER LEVYING PENALTY OF RS.6,72,836/ - UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. THE ACTION IS UNJUSTIFIED AND UNWARRANTED. 3. YOUR PETITIONERS CRAVE LEAVE TO ADD, AMEND, ALTER AND / OR WITHDRAW ANY OR ALL THE AFORESAID GROUND OF APPEAL. 2. BRIEFLY STATED, THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME FOR A.Y. 2012 - 13 ON 12.09.2012, DECLARING ITS TOTAL INCOME AT RS.7,79,085/ - . THE RETURN OF IN COME FILED BY THE ASSESSEE COMPANY WAS INITIALLY PROCESSED AS SUCH UNDER SEC. 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2) OF THE ACT. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WA S OBSERVED BY THE A.O THAT THE ASSESSEE HAD CLAIMED TO HAVE RECEIVED RENT OF RS.37,20,000/ - FROM LETTING OUT OF ITS PROPERTY SITUATED AT 1217, MAKER CHAMBER - V, NARIMAN POINT, MUMBAI - 21. ON A PERUSAL OF THE RECORDS, IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD LET OUT THE PROPERTY @ RS.1,93,750/ - PER MONTH, WHICH THEREIN AGGREGATED TO AN AMOUNT OF RS.23,25,000/ - FOR THE WHOLE YEAR. FURTHER, THE ASSESSEE HAD ENTERED INTO A SEPARATE AGREEMENT FOR PROVISION OF AMENITIES @ RS.1,16,250/ - PER MONTH, WHIC H THEREIN AGGREGATED TO RS.13,95,000/ - FOR THE YEAR UNDER CONSIDERATION. IT WAS OBSERVED BY THE A.O THAT THE RECEIPTS FROM PROVISION OF AMENITIES WERE ALSO REFLECTED BY THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. OBSERVING, THAT ONLY THE RENTAL RECEIPTS PERTAINING TO LETTING OUT OF THE PROPERTY @ RS.1,93, 250/ - PER MONTH WAS TO BE ACCOUNTED FOR UNDER THE HEAD INCOME FROM HOUSE PROPERTY, THE A.O CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY ITS INCOME UNDER THE SAID HEAD OF INCOME MAY NOT BE CONFI NED TO THE SAID EXTENT. IN SUM AND SUBSTANCE, THE ASSESSEE WAS CALLED UPON TO PUT FORTH AN EXPLANATION AS TO WHY THE AMOUNT RECEIVED FROM LETTING OUT OF AMENITIES MAY NOT BE BROUGHT TO TAX UNDER THE HEAD OTHER SOURCES. IN REPLY, IT WAS SUBMITTED BY THE A SSESSEE THAT IT WAS UNDER A BONAFIDE BELIEF THAT ITA NO.1166 & 1167/MUM/2019 A.YS. 2012 - 13 & 2014 - 15 SYMBYOSYS INTEGRATED SOLUTIONS PVT. LTD. VS. INCOME TAX OFFICER - 4(3)(4) 3 AS THE ULTIMATE SOURCE OF THE ENTIRE INCOME 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 RS.13,95,000/ - TO TAX IN THE HANDS OF THE ASSESSEE UNDER THE HEAD OTHER SOURCES. FURTHER, THE A.O WHILE FRAMING THE ASSE SSMENT OBSERVED THAT THE ASSESSEE HAD CLAIMED A DEDUCTION OF INTEREST PAID ON BORROWED CAPITAL OF RS.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 PURCH ASED A PROPERTY ON 22.02.2005 FOR A CONSIDERATION OF RS.56,18,750/ - . THE ASSESSEE HAD RAISED A LOAN OF RS.93, 00, 000/ - FROM ICICI BANK ON 08.06.2006, ON WHICH IN INTEREST OF RS.9,97,034/ - WAS PAID DURING THE YEAR UNDER CONSIDERATION. APART FROM THAT, THE AS SESSEE HAD TAKEN ANOTHER LOAN OF RS.51,00,000/ - ON 31.09.2009 ON THE SAME PROPERTY BY WAY OF A LOAN AGAINST PROPERTY FROM ICICI BANK, ON WHICH INTEREST OF RS.8,27,253/ - WAS PAID. THE ASSESSEE HAD CLAIMED DEDUCTION OF AN AGGREGATE INTEREST EXPENDITURE OF R S.18,24,287/ - [RS.9,97,034/ - (+) RS.8,27,253/ - ] WHILE COMPUTING ITS INCOME UNDER THE HEAD HOUSE PROPERTY. OBSERVING, THAT THE ASSESSEE HAD NOT UTILISED THE FUNDS BORROWED FOR ACQUISITION OF THE PROPERTY IN QUESTION, THE A.O CALLED UPON THE ASSESSEE TO PU T FORTH AN EXPLANATION AS TO WHY THE AFORESAID INTEREST EXPENDITURE OF RS. 18,24,287/ - MAY NOT BE DISALLOWED. IN REPLY, IT WAS ADMITTED BY THE ASSESSEE THAT THE CLAIM FOR DEDUCTION OF THE INTEREST EXPENDITURE WAS THOUGH NOT ALLOWABLE UNDER SEC. 24 OF THE AC T, HOWEVER, THE SAME WAS ON ACCOUNT OF A BONAFIDE MISTAKE CLAIMED BY THE ASSESSEE IN ITS RETURN OF INCOME. ACCORDINGLY, THE ASSESSEE REQUESTED THAT THE INTEREST EXPENDITURE OF RS.18,24,287/ - SO CLAIMED BY IT WHILE COMPUTING ITS INCOME FROM HOUSE PROPERTY MAY BE DISAL LOWED. IN THE BACKDROP OF THE AFORESAID FACTS, THE A.O ITA NO.1166 & 1167/MUM/2019 A.YS. 2012 - 13 & 2014 - 15 SYMBYOSYS INTEGRATED SOLUTIONS PVT. LTD. VS. INCOME TAX OFFICER - 4(3)(4) 4 DISALLOWED THE ASSESSEES CLAIM OF INTEREST EXPENDITURE OF RS.18,24,287/ - . ON THE BASIS OF HIS AFORESAID OBSERVATIONS THE A.O REWORKED OUT THE ASSESSEES INCOME FROM HOUSE PROPERTY AT RS.16,27,500/ - . A CCORDINGLY, THE INCOME OF THE ASSESSEE WAS ASSESSED BY THE A.O VIDE HIS ORDER PASSED UNDER SEC. 143(3), DATED 10.11.2014 AT RS.30,34,240/ - . THE A.O WHILE CULMINATING THE ASSESSMENT ALSO INITIATED PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) FOR CONCEALMENT OF INCOME AND ALSO FOR FURNISHING INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE AFORESAID TWIN DISALLOWANCE/ADDITION MADE IN THE HANDS OF THE ASSESSEE. ALSO, A NOTICE UNDER SEC. 271(1)(C) R.W.S 274, DATED 10.11.2014 WAS ISSUED BY THE A.O, THEREIN CALLING UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY UNDER THE AFORESAID STATUTORY PROVISION MAY NOT BE IMPOSED IN ITS HANDS. 3. AFTER THE CULMINATION OF THE ASSESSMENT PROCEEDINGS THE AO AFFORDED AN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY UNDER SEC. 271(1)(C) MAY NOT BE IMPOSED ON IT. IN REPLY, THE ASSESSEE TRIED TO IMPRESS UPON THE A.O THAT NO PENALTY UNDER SEC. 271(1)(C) WAS LIABLE TO BE IMPOSED IN THE TOTALITY OF THE FACTS PERTAINING TO THE ADDITIONS/DISALLOWANCES MADE IN ITS CASE. HOWEV ER, THE A.O NOT 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 RS.6,72,836/ - UNDER SEC.271(1)(C) FOR CONCEALMENT OF INCOME/FILING INACCURATE PARTICULARS O F 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) B OTH 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 FINDI NG FAVOUR WITH THE CONTENTIONS ADVANCED BY THE ASSESSEE BOTH ON MERITS AS WELL AS ON THE ITA NO.1166 & 1167/MUM/2019 A.YS. 2012 - 13 & 2014 - 15 SYMBYOSYS INTEGRATED SOLUTIONS PVT. LTD. VS. INCOME TAX OFFICER - 4(3)(4) 5 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 IN FAILING TO APPRECIATE THAT THE FAILURE ON THE PART OF THE A.O TO STRIKE OFF THE IRRELEVANT DEFAULT IN THE BODY OF THE S HOW CAUSE NOTICE ( SCN ), HAD THEREIN DIVESTED THE ASSESSEE OF KNOWING AS TO FOR WHA T DEFAULT THE IMPUGNED PENALTY WAS SOUGHT TO BE IMPOSED IN ITS HANDS; AND (II) THAT THE CIT(A) WAS IN ER ROR IN UPHOLDING THE PENALTY IMPOSED BY THE A.O UNDER SEC. 271(1)(C), FAILING TO APPRECIATE THAT NO SUCH PENALTY IN THE BACKDROP OF THE MERITS OF THE CA SE WAS LIABLE TO BE IMPOSED. 6. AS THE ASSESSEE HAS ASSAILED THE VALIDITY OF THE JURISDICTION ASSUMED BY THE A.O FOR IMPOSING PENALTY UNDER SEC. 271(1)(C) OF THE ACT, WE SHALL , THUS, FIRST DEAL WITH THE SAME. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE TOOK US THROUGH THE SCN ISSUED UNDER SEC. 274 R.W.S 271(1)(C), DATED 10.11.2014. THE LD. A.R TAKING US THROUGH THE AFORESAID SCN , DATED 10.11.2014 S UBMITTED , THAT THE A.O HAD FAILED TO STRIKE OFF THE IRRELEVANT DEFAULT IN THE BOD Y OF THE SAID NOTICE, AS A RESULT WHEREOF THE ASSESSEE HAD REMAINED DIVESTED OF AN OPPORTUNITY TO DEFEND ITS CASE IN THE ABSENCE OF BEING PUT TO NOTICE AS TO FOR WHAT DEFAULT THE IMPUGNED PENALTY WAS SOUGHT TO BE IMPOSED IN ITS HANDS. IN SUPPORT OF ITS AFO RESAID CONTENTION THAT IN A CASE WHERE THE ASSESSEE WAS NOT VALIDLY PUT TO NOTICE IN THE SCN , AS REGARDS THE DEFAULT FOR WHICH THE PENALTY WAS PROPOSED TO BE IMPOSED, NO PENALTY UNDER SEC. 271(1)(C) COULD VALIDLY BE IMPOSED, THE LD. A.R RELIED ON THE JUD GMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. SAMS O N PERINCHERY [ ITA NO. 1154 OF 2014, DATED 05.01.2017 ] . AS SUCH, IT WAS AVERRED BY THE LD. A.R THAT THE A.O HAD WRONGLY ASSUMED JURISDICTION AND THEREIN IMPOSED PENALTY UNDER SEC. 271(1)( C) OF THE ACT. ON MERITS, IT WAS SUBMITTED BY THE LD. A.R THAT AS THE ASSESSEE HAD DULY DISCLOSED THE ENTIRE ITA NO.1166 & 1167/MUM/2019 A.YS. 2012 - 13 & 2014 - 15 SYMBYOSYS INTEGRATED SOLUTIONS PVT. LTD. VS. INCOME TAX OFFICER - 4(3)(4) 6 FACTS AS REGARDS ITS INCOME IN THE RETURN OF INCOME, THEREFORE, MERELY ON ACCOUNT OF A BONAFIDE MISTAKE IN THE CLAIM OF THE INTEREST EXPENDITURE, AND ALSO ACCOUNTING FOR THE RECEIPTS FROM LETTING OUT OF AMENITIES UNDER A WRONG HEAD OF INCOME WOULD NOT JUSTIFY LEVY OF PENALTY UNDER SEC. 271(1)(C) OF THE ACT ON SUCH STANDALONE BASIS . 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R ) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD. D.R THAT THE FAILURE ON THE PART OF THE A.O STRIKE OFF THE IRRELEVANT DEFAULT WAS MERELY A TECHNICAL ERROR, WHICH BY NO MEANS WOULD LEAD TO RENDERING THE PENALTY IMPOSED ON THE AS SESSEE 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 PRONOUNCEMENT S 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 O R FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. ADMITTEDLY, THE A.O WHILE CULMINATING THE ASSESSMENT HAD INITIATED THE PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) FOR CONCEALMENT OF INCOME AND ALSO FURNISHING INACCURATE PARTICULARS OF INCOME, AND THEREAFTER, HAD IMPOSED THE PENALTY VIDE HIS ORDER DATED 21.05.2015 FOR CONCEALMENT OF INCOME/FILING INACCURATE PARTICULARS OF INCOME: ITA NO.1166 & 1167/MUM/2019 A.YS. 2012 - 13 & 2014 - 15 SYMBYOSYS INTEGRATED SOLUTIONS PVT. LTD. VS. INCOME TAX OFFICER - 4(3)(4) 7 9. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ISSUE BEFORE US A ND ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE VIEW TAKEN BY THE CIT(A). AS OBSERVED BY US HEREINABOVE, IT IS A MATTER OF FACT BORNE FROM THE RECORDS THAT THE A.O HAD IN THE AFORESAID SCN DATED 10.11.2014 FAILED TO POINT OUT THE DEFAULT FOR WHIC H PENALTY WAS SOUGHT TO BE IMPOSED BY HIM ON THE ASSESSEE COMPANY . AS OBSERVED BY US HEREINABOVE, THE A.O IN THE SCN, DATED 10.11.2014 HAD CALLED UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY U/S 271(1)(C) MAY NOT BE IMPOSED ON IT FOR HAVING CONCEALE D PARTICULARS OF ITS INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. IN OUR CONSIDERED VIEW, AS BOTH OF THE TWO DEFAULTS ENVISAGED IN SEC. 271(1)(C) I.E CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE SEPARAT E AND DISTINCT DEFAULTS WHICH OPERATE IN THEIR INDEPENDENT AND EXCLUSIVE FIELDS, IT WAS, THUS, OBLIGATORY ON THE PART OF THE A.O TO HAVE CLEARLY PUT THE ASSESSEE TO NOTICE AS REGARDS THE DEFAULT FOR WHICH IT WAS CALLED UPON TO EXPLAIN AS TO WHY PENALTY UND ER SEC. 271(1)(C) MAY NOT BE IMPOSED. AS OBSERVED BY US HEREINABOVE, A PERUSAL OF THE SHOW CAUSE NOTICE ISSUED IN THE PRESENT CASE BY THE A.O UNDER SEC. 274 R.W. SEC. 271(1)(C), DATED 10.11.2014 CLEARLY REVEALS THAT THERE WAS NO APPLICATION OF MIND ON TH E 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 IN FACT, WOULD BE RENDERE D REDUNDANT IF AN ASSESSEE IS NOT CONVEYED IN CLEAR TERMS THE SPECIFIC DEFAULT FOR WHICH PENALTY UNDER THE SAID STATUTORY PROVISION WAS SOUGHT TO BE IMPOSED ON IT. IN OUR CONSIDERED VIEW THE INDISPENSABLE REQUIREMENT ON THE PART OF THE A.O TO PUT THE ASSES SEE 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. ITA NO.1166 & 1167/MUM/2019 A.YS. 2012 - 13 & 2014 - 15 SYMBYOSYS INTEGRATED SOLUTIONS PVT. LTD. VS. INCOME TAX OFFICER - 4(3)(4) 8 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 PARTICULA RS 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 THA T 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 CONTEMPLATED IN SEC. 271(1)(C) VIZ. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME HAD BEEN APPRECIAT ED AT LENGTH BY THE HONBLE SUPREME COURT IN ITS JUDGMENTS PASSED IN THE CASE OF DILIP & SHROFF VS. JT. CIT (2007) 210 CTR (SC) 228 AND T. ASHOK PAI VS. CIT (2007) 292 ITR 11 (SC) . THE HONBLE APEX COURT IN ITS AFORESAID JUDGMENTS HAD OBSERVED THAT THE TWO EXPRESSIONS, VIZ. CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME HAVE DIFFERENT CONNOTATION. THE HONBLE APEX COURT BEING OF THE VIEW THAT THE NON - STRIKING OFF THE IRRELEVANT LIMB IN THE NOTICE CLEARLY REVEA LS A NON - APPLICATION OF MIND BY THE A.O HAD OBSERVED AS UNDER: - 83. IT IS OF SOME SIGNIFICANCE THAT IN THE STANDARD PROFORMA USED BY THE ASSESSING OFFICER IN ISSUING A NOTICE DESPITE THE FACT THAT THE SAME POSTULATES THAT INAPPROPRIATE WORDS AND PARAGRAPH S WERE TO BE DELETED, BUT THE SAME HAD NOT BEEN DONE. THUS, THE ASSESSING OFFICER HIMSELF WAS NOT SURE AS TO WHETHER HE HAD PROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED HIS INCOME OR HE HAS FURNISHED INACCURATE PARTICULARS. EVEN BEFORE US, THE LE ARNED ADDITIONAL SOLICITOR GENERAL WHILE PLACING RELIANCE ON THE ORDER OF ASSESSMENT LAID EMPHASIS THAT HE HAD DEALT WITH BOTH THE SITUATIONS. ITA NO.1166 & 1167/MUM/2019 A.YS. 2012 - 13 & 2014 - 15 SYMBYOSYS INTEGRATED SOLUTIONS PVT. LTD. VS. INCOME TAX OFFICER - 4(3)(4) 9 84. THE IMPUGNED ORDER, THEREFORE, SUFFERS FROM NON - APPLICATION OF MIND. IT WAS ALSO BOUND TO COMPLY WITH THE PRINCIPLES OF NATURAL JUSTICE [SEE MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 2 SCC 718]. 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, THEREFORE, IN CASE THE A.O SEEKS TO PROCEED AGAINST THE ASSESSEE FOR EITHER OF THE SAID DEFAULTS, THEN, IT WOULD BE INCUMBENT ON HIM TO CLEARLY SPECIFY 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 MERELY A TECHNICAL DEFAULT, FOR THE REASON, THAT THE SAME HAD CLEARLY DIVESTED THE ASSESSEE OF HIS STATUTORY RIGHT OF AN OPPORTUNITY OF BEING HEARD AND DEFEND ITS CASE. APART FROM THAT, 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 THE IR 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 A DDITION/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 HONBLE HIGH C OURT OF KARNATAKA IN THE CASE OF CIT VS. SSAS 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 NOT ICE 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 INACCURATE PARTICULARS, THE SAME HAS TO ITA NO.1166 & 1167/MUM/2019 A.YS. 2012 - 13 & 2014 - 15 SYMBYOSYS INTEGRATED SOLUTIONS PVT. LTD. VS. INCOME TAX OFFICER - 4(3)(4) 10 BE HELD AS BAD IN LAW. THE SPECIAL LEAVE PETITION (FOR SHORT SLP) FILED BY THE REVENUE AGAINST THE AFORESAID ORDER OF THE HONBLE HIGH COURT OF KARNATAKA HAD BEEN DISMISSED BY THE HONBLE SUPREME COURT IN CIT VS. SSAS EMERALD MEADOWS (201 6) 73 TAXMANN.COM 248 (SC) . APART FROM THAT, WE FIND THAT A SIMILAR VIEW HAD BEEN TAKEN BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. SAMSON PERINCHERY (ITA NO. 1154 OF 2014; DT. 05.01.2017)(BOM) . FURTHER, WE FIND, THAT THE ISSUE THAT AN INDI SPENSABLE OBLIGATION IS CAST UPON THE A.O TO CLEARLY PUT THE ASSESSEE TO NOTICE OF THE CHARGE UNDER THE AFORESAID STATUTORY PROVISION I.E SEC. 271(1)(C), HAD BEEN DELIBERATED UPON BY A COORDINATE BENCH OF THE TRIBUNAL, I.E. ITAT C BENCH, MUMBAI IN THE C ASE OF M/S ORBIT ENTERPRISES VS. ITO - 15(2)(2), MUMBAI (ITA NO. 1596 & 1597/MUM/2014, DATED 01.09.2017) . THE TRIBUNAL IN THE AFOREMENTIONED CASE AFTER CONSIDERING VARIOUS JUDICIAL PRONOUNCEMENTS, HAD CONCLUDED, THAT THE FAILURE TO SPECIFY THE CHARGE IN THE SHOW CAUSE NOTICE CLEARLY REFLECTS THE NON - APPLICATION OF MIND BY THE A.O, AND WOULD RESULTANTLY RENDER THE ORDER PASSED BY HIM UNDER SEC. 271(1)(C) IN THE BACKDROP OF THE SAID SERIOUS INFIRMITY AS INVALID AND VOID AB INITIO. IN FACT, A PERUSAL OF THE OR DER PASSED BY THE A.O U/S 271(1)(C), DATED 21.05.2015 S UPPORT S OUR CONVICTION THAT THERE HAD BEEN TOTAL INAPPLICATION OF MIND BY THE A.O, NOT ONLY WHILE INITIATING THE PENALTY PROCEEDINGS BUT ALSO AT THE TIME OF IMPOSITION OF THE SAME. AS IS DISCERNIBLE FROM THE ORDER PASSED U/S 271(1)(C), WE FIND, THAT THE A.O HAD IMPOSED THE PENALTY UNDER THE SAID STATUTORY PROVISION FOR CONCEALMENT OF INCOME/FILING INACCURATE PARTICULARS OF INCOME. ACCORDINGLY, THE A.O EVEN AT THE TIME OF IMPOSING OF PENALTY HAD NOT PO INTED OUT THE DEFAULT FOR WHICH PENALTY U/S 271(1)(C) WAS BEING IMPOSED ON THE ASSESSEE. 11. IN THE BACKDROP OF OUR AFORESAID DELIBERATIONS, WE ARE OF THE CONSIDERED VIEW THAT THE FAILURE ON THE PART OF THE A.O TO CLEARLY PUT THE ASSESSEE TO NOTICE AS RE GARDS THE DEFAULT FOR WHICH PENALTY UNDER SEC. 271(1)(C) WAS SOUGHT TO BE IMPOSED ON IT IN THE SCN, DATED 10.11.2014, HAD LEFT THE ASSESSEE GUESSING OF THE DEFAULT FOR WHICH IT WAS BEING PROCEEDED AGAINST. APART FROM ITA NO.1166 & 1167/MUM/2019 A.YS. 2012 - 13 & 2014 - 15 SYMBYOSYS INTEGRATED SOLUTIONS PVT. LTD. VS. INCOME TAX OFFICER - 4(3)(4) 11 THAT, AS THE TWO DEFAULTS VIZ. CONCE ALMENT 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 RS.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 HA S BEEN QUASHED BY US IN TERMS OF OUR AFORESAID OBSERVATIONS, WE THUS, REFRAIN FROM ADVERTING TO AND ADJUDICATING THE MERITS OF THE CASE. 13. TH E APPEAL OF THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ITA NO.1167/MUM/2019 A.Y. 2014 - 15 14. AS THE FACTS AND THE ISSUE INVOLVED IN THE PRESENT APPEAL REMAINS THE SAME AS WERE THERE BEFORE US IN THE APPEAL OF THE ASSESSEE FOR A.Y.2012 - 13 I.E ITA NO.1166/MUM/2019, THEREFORE, OUR ORDER THEREIN PASSED SHALL APPLY MUTATIS MUTANDIS FOR THE DISPOSAL OF THE PRESENT APPEAL FOR A.Y. 2014 - 15 IN ITA NO. 1167/MUM/2019. ACCORDINGLY, THE PE NALTY IMPOSED BY THE A.O UNDER SEC. 271(1)(C) OF RS.1,53,814/ - IS QUASHED IN THE SAME TERMS. 15. THE APPEAL OF THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ITA NO.1166 & 1167/MUM/2019 A.YS. 2012 - 13 & 2014 - 15 SYMBYOSYS INTEGRATED SOLUTIONS PVT. LTD. VS. INCOME TAX OFFICER - 4(3)(4) 12 16. THE APPEALS OF THE ASSESSEE FOR A.Y 2012 - 13 AND A.Y 2014 - 15 IN ITA NOS.1166 & 1167/MUM/2019 ARE ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 , BY PLACING THE DETAILS ON THE NOTICE BOARD. SD/ - SD/ - MANOJ KUMAR AG G ARWAL RAVISH SOOD (ACCOUNTANT MEMBER) ( JUDICIAL MEMBER) MUMBAI, DATE: 19 .10.2020 R. KUMAR COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI