LATE SHRI AHSAN AHMED SHAIKH, MUMBAI V. ITO 20(1)(1), MUMBAI

ITA 2344/MUM/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0668 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-12-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 08-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Peak credit
• Section: 271(1)(c); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI RAJESH KUMAR , HON'BLE ACCOUNTANT MEMBER ITA NO. 2344 /MUM/201 4 (A.Y: 2006 - 07 ) SHRI MOHD. ARIF SHAIKH (LEGAL HEIR OF LATE MR. AHSAN AHMED SHAIKH ) C/O. RAJ ENGINEERING CO , OPP. RUBY COACH, CHIMAT PADA , MAR OL NAKA, ANDHERI (EAST), MUMBAI 400 059 PAN: AAXPS 7925 F V. I.T.O 20(1)(1 ) PIRAMAL CHAMBERS, LOWER PAREL, MUMBAI 400 012 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NEELKANTH KHANDELWAL DEPARTMENT BY : SHRI ANOOP HIWASE DATE OF HEARING : 21 .08.2018 DATE OF PRONOUNCEMENT : 14 .11 .2018 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) - 32, MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 12.03.2014 FOR THE ASSESSMENT YEAR 2006 - 07 IN SUSTAINING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 2. LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, REFERRING TO THE COPY OF THE NOTICE I SSUED U/S. 274 R.W.S. 271 OF THE ACT SUBMITTED THAT THERE IS 2 ITA NO.2344/MUM/2014 (A.Y: 2006 - 07) SHRI MOHD. ARIF SHAIKH NON - APPLICATION OF MIND BY THE ASSESSING OFFICER IN INITIATING THE PENALTY PROCEEDINGS. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER DID NOT SPECIFY ANY CHARGE FOR WHICH TH E PENALTY IS PROPOSED TO BE LEVIED. IT IS NOT CLEAR FROM THE NOTICE AS TO FOR WHICH LIMB OF THE NOTICE PENALTY IS PROPOSED TO BE LEVIED AS THERE IS NON - STRIKE OF THE IRRELEVANT LIMB IN THE NOTICE. LD. COUNSEL FOR THE ASSESSEE FURTHER REFERRING TO THE ASS ESSMENT ORDER PASSED U /S. 144 OF THE ACT DATED 29.12. 20 08 SUBMITTED THAT, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS FOR CONCEALMENT OF INCOME AND ALSO FOR FURNISHING INACCURATE PARTICULARS OF INCOME, THUS HE SUBMITTED THAT THE ASSESSING OFFICER IS NOT CLEAR AS TO FOR WHICH LIMB THE PENALTY IS PROPOSED TO BE LEVIED. FU RTHER, REFERRING TO THE PENALTY ORDER LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT PENALTY WAS IMPOSED FOR FURNISHING INACCURATE PARTICULARS. THEREFORE, HE SUBMITS THAT THERE IS COMPLETE NON - APPLICATION OF MIND BY THE ASSESSING OFFICER IN INITIATING THE PE NALTY PROCEEDINGS AND WHILE IMPOSING THE PENALTY U/S. 271(1)(C) OF THE ACT, THEREFORE, THE PENALTY ORDER IS BAD IN LAW. IN SUPPORT OF HIS SUBMISSIONS, LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS: - (I) MEHERJEE CASSINATH HOLDINGS (P.) LTD. V. ACIT IN ITA.NO. 2555/MUM/2012 DATED 28.04.2017 . (II) REKHA BHUPENDRA DALAL V. DCIT IN ITA.NO. 3363/MUM 2016 DATED 29.05.2017. (III) BANGGREEN HOLDING (P.) LTD. V. DCIT IN ITA.NOS. 1999 & 2000/MUM/2014 DATED 31.05.2017. (IV) DR. SARITA MILIND DAVARE V. ACIT IN ITA.NOS. 2187 & 1789/MUM/2014 DATED 12.12.2016 . (V) CIT V . SAMSON PERINCHERY [392 ITR 4] 3 ITA NO.2344/MUM/2014 (A.Y: 2006 - 07) SHRI MOHD. ARIF SHAIKH 3. COMING TO THE MERITS OF THE CASE, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION U/S.68 OF THE ACT ON TOTAL DEPOSITS MADE IN BANK ACCOUNT. FURTHER, LD. CIT(A) ADOPTED THE PEAK CREDIT WHICH METHOD WAS SUSTAINED BY THE TRIBUNAL WITH DIRECTIONS TO EXCLUDE OPENING BALANCES IN THE ENTRY RELATING TO THE ASSESSEES BROTHER. THEREFORE, IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT, S INCE THE ADDITION WAS MADE FINALLY SUSTAINED ON PEAK BASIS, THERE IS NO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS BY THE ASSESSEE AND PENALTY MADE MAY NOT BE LEVIED. 4. ON THE OTHER HAND, LD. DR STRONGLY SUPPORTED THE OR DERS OF THE AUTHORITIE S BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ADMITTEDLY IN THIS CASE THE ASSESSING OFFICER ISSUED NOTICE U/S. 274 R.W.S. 271 OF THE ACT IN A ROUTINE MANNER WITHOUT SPECIFYING THE CHARGE FOR WHICH THE PENALTY I S PROPOSED TO BE LEVIED I.E. EITHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF SAID INCOME. WHILE PASSING THE ASSESSMENT ORDER THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS FOR CONCEALMENT OF INCOME AND FOR FURNISHING INAC CURATE PARTICULARS OF INCOME. HOWEVER, WHILE PASSING THE PENALTY ORDER THE ASSESSING OFFICER LEVIED PENALTY FOR CONCEALMENT OF PARTICULARS 4 ITA NO.2344/MUM/2014 (A.Y: 2006 - 07) SHRI MOHD. ARIF SHAIKH OF INCOME. THEREFORE, WE OBSERVE THAT THERE IS A COMPLETE NON - APPLICATION OF MIND BY THE ASSESSING OFFICER IN INITIA TING THE PENALTY PROCEEDINGS. 6. AN IDENTICAL SITUATION HAS BEEN CONS IDERED BY THE COORDINATE BENCH IN MEHERJEE CASSINATH HOLDINGS V. ACIT (SUPRA) AS TO WHETHER THE ACTION OF THE ASSESSING OFFICER IN INITIATING PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT W ITHOUT STRIKING OFF ONE OF THE LIMBS AND WITHOUT SPECIFYING THE SPECIFIC CHARGE IN THE NOTICE INITIATING PENALTY PROCEEDINGS FOR INACCURATE PARTICULARS OF INCOME IN THE ASSESSMENT ORDER AND THE COORDINATE BENCH CONSIDERING THE DECISION OF THE HON'BLE JURIS DICTIONAL HIGH COURT IN THE CASE OF CIT V . SAMSON PERINCHERY [392 ITR 4] AND ALSO VARIOUS DECISIONS HELD THAT ACTION OF THE ASSESSING OFFICER IN NON - STRIKING OFF RELEVANT CLAUSE IN THE NOTICE SHOWS THAT THE CHARGE BEING MADE AGAINST THE ASSESSEE IS NOT FIR M THEREFORE PROCEEDINGS SUFFER FROM NON - COMPLIANCE WITH PRINCIPLES OF NATURAL JUSTICE IN AS MUCH AS THE ASSESSING OFFICER HIMSELF IS NOT SURE OF THE CHARGE AND THE ASSESSEE IS NOT MADE AWARE AS TO WHICH OF THE TWO LIMBS OF SECTION U/S. 271(1)(C) OF THE ACT HE HAS TO RESPOND. WHILE HOLDING SO THE COORDINATE BENCH OBSERVED AS UNDER: - 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. SEC. 271(1)(C) OF THE ACT EMPOWERS THE ASSESSING OFFICER TO IMPOSE PENALTY TO THE EXTENT SPECIFIED IF, IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, HE IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IN OTHER WORDS, WHAT SEC. 271(1)(C) OF THE ACT POSTULATES IS THAT THE PENALTY CAN BE LEVIED ON THE EX ISTENCE OF ANY OF THE TWO SITUATIONS, NAMELY, FOR CONCEALING THE PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, IT IS OBVIOUS FROM THE PHRASEOLOGY OF SEC. 271(1)(C) OF THE ACT THAT THE IMPOSITION OF PENALTY IS INVITED ONLY WHEN THE CONDITIONS PRESCRIBED U/S 271(1)(C) 5 ITA NO.2344/MUM/2014 (A.Y: 2006 - 07) SHRI MOHD. ARIF SHAIKH OF THE ACT EXIST. IT IS ALSO A WELL - ACCEPTED PROPOSITION THAT CONCEALMENT OF THE PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME REFERRED TO IN SEC. 271(1)(C) OF THE ACT DENOTE DIFFERENT CONNOTATIONS. IN FACT, THIS DISTINCTION HAS BEEN APPRECIATED EVEN AT THE LEVEL OF HON'BLE SUPREME COURT NOT ONLY IN THE CASE OF DILIP N. SHROFF (SUPRA) BUT ALSO IN THE CASE OF T.ASHOK PAI, 292 ITR 11 (SC). THEREFORE, IF THE TWO EXPRESSIONS, NAMEL Y CONCEALMENT OF THE PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME HAVE DIFFERENT CONNOTATIONS, IT IS IMPERATIVE FOR THE ASSESSEE TO BE MADE AWARE AS TO WHICH OF THE TWO IS BEING PUT AGAINST HIM FOR THE PURPOSE OF LEVY OF PEN ALTY U/S 271(1)(C) OF THE ACT, SO THAT THE ASSESSEE CAN DEFEND ACCORDINGLY. IT IS IN THIS BACKGROUND THAT ONE HAS TO APPRECIATE THE PRELIMINARY PLEA OF ASSESSEE, WHICH IS BASED ON THE MANNER IN WHICH THE NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT DATED 10. 12.2010 HAS BEEN ISSUED TO THE ASSESSEE COMPANY. A COPY OF THE SAID NOTICE HAS BEEN PLACED ON RECORD AND THE LEARNED REPRESENTATIVE CANVASSED THAT THE SAME HAS BEEN ISSUED BY THE ASSESSING OFFICER IN A STANDARD PROFORMA, WITHOUT STRIKING OUT THE IRRELEVANT CLAUSE. IN OTHER WORDS, THE NOTICE REFERS TO BOTH THE LIMBS OF SEC. 271(1)(C) OF THE ACT, NAMELY CONCEALMENT OF THE PARTICULARS OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. QUITE CLEARLY, NON - STRIKING - OFF OF THE IRRELEVANT LIMB IN THE SAID NOTICE DOES NOT CONVEY TO THE ASSESSEE AS TO WHICH OF THE TWO CHARGES IT HAS TO RESPOND. THE AFORESAID INFIRMITY IN THE NOTICE HAS BEEN SOUGHT TO BE DEMONSTRATED AS A REFLECTION OF NON - APPLICATION OF MIND BY THE ASSESSING OFFICER, AND IN SUPPORT, REFERENCE HAS BEEN MADE TO THE FOLLOWING SPECIFIC DISCUSSION IN THE ORDER OF HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA): - 83. IT IS OF SOME SIGNIFICANCE THAT IN THE STANDARD PROFORMA USED BY THE ASSESSING OFFICER IN ISSUING A NOTICE DES PITE THE FACT THAT THE SAME POSTULATES THAT INAPPROPRIATE WORDS AND PARAGRAPHS 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 HAD FURNISHED INACCURATE PARTICULARS. EVEN BEFORE US, THE LEARNED ADDITIONAL SOLICITOR GENERAL WHILE PLACING THE ORDER OF ASSESSMENT LAID EMPHASIS THAT HE HAD DEALT WITH BOTH THE SITUATIONS. 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. V. CIT [2000] 2 SCC 718] 9. FACTUALLY SPEAKING, THE AFORESAID PLEA OF ASSESSEE IS BORNE OUT OF RECORD AND HAVING REGARD TO THE PARITY OF REASONING LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA), THE NOTICE IN THE INSTANT CASE DOES SUFFER FROM THE VICE OF NON - APPLICATION OF MIND BY THE ASSESSING OFFICER. IN FACT, A SIMILAR PROPOSITION WAS ALSO ENUNCIA TED BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF M/S. SSAS EMERALD MEADOWS (SUPRA) AND AGAINST SUCH A JUDGMENT, THE SPECIAL LEAVE PETITION FILED BY THE REVENUE HAS SINCE BEEN DISMISSED BY THE HON'BLE SUPREME COURT VIDE ORDER DATED 5.8.2016, A COPY O F WHICH IS ALSO PLACED ON RECORD. 10. IN FACT, AT THE TIME OF HEARING, THE LD. CIT - DR HAS NOT DISPUTED THE FACTUAL MATRIX, BUT SOUGHT TO POINT OUT THAT THERE IS DUE APPLICATION OF MIND BY THE 6 ITA NO.2344/MUM/2014 (A.Y: 2006 - 07) SHRI MOHD. ARIF SHAIKH ASSESSING OFFICER WHICH CAN BE DEMONSTRATED FROM THE DISCUSSION IN THE ASSESSMENT ORDER, WHEREIN AFTER DISCUSSING THE REASONS FOR THE DISALLOWANCE, HE HAS RECORDED A SATISFACTION THAT PENALTY PROCEEDINGS ARE INITIATED U/S 271(1)(C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN OUR CONSIDERED OPINION, THE ATTEMPT OF THE LD. CIT - DR TO DEM ONSTRATE APPLICATION OF MIND BY THE ASSESSING OFFICER IS NO DEFENCE INASMUCH AS THE HON'BLE SUPREME COURT HAS APPROVED THE FACTUM OF NON - STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE AS REFLECTIVE OF NON - APPLICATION OF MIND BY THE ASSESSING OFFICER. SINCE THE FACTUAL MATRIX IN THE PRESENT CASE CONFORMS TO THE PROPOSITION LAID DOWN BY THE HON'BLE SUPREME COURT, WE PROCEED TO REJECT THE ARGUMENTS ADVANCED BY THE LD. CIT - DR BASED ON THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. FURTH ER, IT IS ALSO NOTICEABLE THAT SUCH PROPOSITION HAS BEEN CONSIDERED BY THE HON'BLE BOMBAY HIGH COURT ALSO IN THE CASE OF SHRI SAMSON PERINCHERY, ITA NOS. 1154, 953, 1097 & 1126 OF 2014 DATED 5.1.2017 (SUPRA) AND THE DECISION OF THE TRIBUNAL HOLDING LEVY OF PENALTY IN SUCH CIRCUMSTANCES BEING BAD, HAS BEEN APPROVED. 11. APART FROM THE AFORESAID, THE LD. CIT - DR MADE AN ARGUMENT BASED ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SMT. KAUSHALYA & OTHERS, 216 ITR 660 (BOM.) TO CANVASS SUPPORT FOR HIS PLEA THAT NON - STRIKING OFF OF THE IRRELEVANT PORTION OF NOTICE WOULD NOT INVALIDATE THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. WE HAVE CAREFULLY CONSIDERED THE SAID ARGUMENT SET - UP BY THE LD. CIT - DR AND FIND THAT A SIMILAR ISSUE HAD COME UP B EFORE OUR COORDINATE BENCH IN THE CASE OF DR. SARITA MILIND DAVARE (SUPRA). OUR COORDINATE BENCH, AFTER CONSIDERING THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SMT. KAUSHALYA & ORS., (SUPRA) AS ALSO THE JUDGMENTS OF THE HON'BLE SUPREME COU RT IN THE CASE OF DILIP N. SHROFF (SUPRA) AND DHARMENDRA TEXTILE PROCESSORS, 306 ITR 277 (SC) DEDUCED AS UNDER : - 12. A COMBINED READING OF THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT. B KAUSHALYA AND OTHERS (SUPRA) AND THE DEC ISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF DILIP N SHROFF (SUPRA) WOULD MAKE IT CLEAR THAT THERE SHOULD BE APPLICATION OF MIND ON THE PART OF THE AO AT THE TIME OF ISSUING NOTICE. IN THE CASE OF LAKHDIR LALJI (SUPRA), THE AO ISSUED NOTICE U/S 2 74 FOR CONCEALMENT OF PARTICULARS OF INCOME BUT LEVIED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE GUJARAT HIGH COURT QUASHED THE PENALTY SINCE THE BASIS FOR THE PENALTY PROCEEDINGS DISAPPEARED WHEN IT WAS HELD THAT THERE WAS NO SU PPRESSION OF INCOME. THE HONBLE KERALA HIGH COURT HAS STRUCK DOWN THE PENALTY IMPOSED IN THE CASE OF N.N.SUBRAMANIA IYER VS. UNION OF INDIA (SUPRA), WHEN THERE IS NO INDICATION IN THE NOTICE FOR WHAT CONTRAVENTION THE PETITIONER WAS CALLED UPON TO SHOW CA USE WHY A PENALTY SHOULD NOT BE IMPOSED. IN THE INSTANT CASE, THE AO DID NOT SPECIFY THE CHARGE FOR WHICH PENALTY PROCEEDINGS WERE INITIATED AND FURTHER HE HAS ISSUED A NOTICE MEANT FOR CALLING THE ASSESSEE TO FURNISH THE RETURN OF INCOME. HENCE, IN THE IN STANT CASE, THE ASSESSING OFFICER DID NOT SPECIFY THE CHARGE FOR WHICH THE PENALTY PROCEEDINGS WERE INITIATED AND ALSO ISSUED AN INCORRECT NOTICE. BOTH THE ACTS OF THE AO, IN OUR VIEW, CLEARLY SHOW THAT THE AO DID NOT APPLY HIS MIND WHEN HE ISSUED NOTICE T O THE ASSESSEE AND HE WAS NOT SURE AS TO WHAT PURPOSE THE NOTICE WAS ISSUED. THE HONBLE BOMBAY HIGH 7 ITA NO.2344/MUM/2014 (A.Y: 2006 - 07) SHRI MOHD. ARIF SHAIKH COURT HAS DISCUSSED ABOUT NON - APPLICATION OF MIND IN THE CASE OF KAUSHALYA (SUPRA) AND OBSERVED AS UNDER: - ....THE NOTICE CLEARLY DEMONSTRATED NON - APPLIC ATION OF MIND ON THE PART OF THE INSPECTING ASSISTANT COMMISSIONER. THE VAGUENESS AND AMBIGUITY IN THE NOTICE HAD ALSO PREJUDICED THE RIGHT OF REASONABLE OPPORTUNITY OF THE ASSESSEE SINCE HE DID NOT KNOW WHAT EXACT CHARGE HE HAD TO FACE. IN THIS BACK GROUN D, QUASHING OF THE PENALTY PROCEEDINGS FOR THE ASSESSMENT YEAR 1967 - 68 SEEMS TO BE FULLY JUSTIFIED. IN THE INSTANT CASE ALSO, WE ARE OF THE VIEW THAT THE AO HAS ISSUED A NOTICE, THAT TOO INCORRECT ONE, IN A ROUTINE MANNER. FURTHER THE NOTICE DID NOT SPEC IFY THE CHARGE FOR WHICH THE PENALTY NOTICE WAS ISSUED. HENCE, IN OUR VIEW, THE AO HAS FAILED TO APPLY HIS MIND AT THE TIME OF ISSUING PENALTY NOTICE TO THE ASSESSEE. 12. THE AFORESAID DISCUSSION CLEARLY BRINGS OUT AS TO THE REASONS WHY THE PARITY OF REASONI NG LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA) IS TO PREVAIL. FOLLOWING THE DECISION OF OUR COORDINATE BENCH IN THE CASE OF DR. SARITA MILIND DAVARE (SUPRA), WE HEREBY REJECT THE AFORESAID ARGUMENT OF THE LD. CIT - DR. 13. APAR T FROM THE AFORESAID DISCUSSION, WE MAY ALSO REFER TO THE ONE MORE SEMINAL FEATURE OF THIS CASE WHICH WOULD DEMONSTRATE THE IMPORTANCE OF NON - STRIKING OFF OF IRRELEVANT CLAUSE IN THE NOTICE BY THE ASSESSING OFFICER. AS NOTED EARLIER, IN THE ASSESSMENT ORDE R DATED 10.12.2010 THE ASSESSING OFFICER RECORDS THAT THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE TO BE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HOWEVER, IN THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT OF EVEN DATE, B OTH THE LIMBS OF SEC. 271(1)(C) OF THE ACT ARE REPRODUCED IN THE PROFORMA NOTICE AND THE IRRELEVANT CLAUSE HAS NOT BEEN STRUCK - OFF. QUITE CLEARLY, THE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND NON - STRIKING OFF OF THE IRRELEVANT CLAUS E IN THE NOTICE CLEARLY BRINGS OUT THE DIFFIDENCE ON THE PART OF ASSESSING OFFICER AND THERE IS NO CLEAR AND CRYSTALLISED CHARGE BEING CONVEYED TO THE ASSESSEE U/S 271(1)(C), WHICH HAS TO BE MET BY HIM. AS NOTED BY THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA), THE QUASI - CRIMINAL PROCEEDINGS U/S 271(1)(C) OF THE ACT OUGHT TO COMPLY WITH THE PRINCIPLES OF NATURAL JUSTICE, AND IN THE PRESENT CASE, CONSIDERING THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ALONGSIDE HIS AC TION OF NON - STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE SHOWS THAT THE CHARGE BEING MADE AGAINST THE ASSESSEE QUA SEC. 271(1)(C) OF THE ACT IS NOT FIRM AND, THEREFORE, THE PROCEEDINGS SUFFER FROM NON - COMPLIANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ASMUCH AS THE ASSESSING OFFICER IS HIMSELF UNSURE AND ASSESSEE IS NOT MADE AWARE AS TO WHICH OF THE TWO LIMBS OF SEC. 271(1)(C) OF THE ACT HE HAS TO RESPOND. 14. THEREFORE, IN VIEW OF THE AFORESAID DISCUSSION, IN OUR VIEW, THE NOTICE ISSUED BY THE ASSESSING O FFICER U/S 274 R.W.S. 271(1)(C) OF THE ACT DATED 10.12.2010 IS UNTENABLE AS IT SUFFERS FROM THE VICE OF NONAPPLICATION OF MIND HAVING REGARD TO THE RATIO OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA) AS WELL AS THE JUD GMENT OF THE HON'BLE BOMBAY HIGH COURT 8 ITA NO.2344/MUM/2014 (A.Y: 2006 - 07) SHRI MOHD. ARIF SHAIKH IN THE CASE OF SHRI SAMSON PERINCHERY (SUPRA). THUS, ON THIS COUNT ITSELF THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT IS LIABLE TO BE DELETED. WE HOLD SO. SINCE THE PENALTY HAS BEEN DELETED ON THE PRELIMINARY POINT, THE OTHER ARGUMENTS RAISED BY THE APPELLANT ARE NOT BEING DEALT WITH. 7. FOLLOWING THE ABOVE DECISION , SIMILAR VIEW HAS BEEN TAKEN BY THE C OORDINATE BENCH IN THE CASE OF ORBIT EN TERPRISES V. INCOME TAX OFFICER [60 ITR (TRIB.) 252]. RESPECTFULLY FOLLOWING THE SAID DECISION, WE HOLD THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S. 274 R.W.S. 271(1)(C) OF THE ACT IS ON ACCOUNT OF NON - APPLICATION OF MIND AND THEREFORE ON THIS ACCOUNT ITSELF T HE PENALTY IMPOSED U/S.271(1)(C) IS LIABLE TO BE DELETED. THUS, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT . AS WE HAVE HELD THAT THE PENALTY BE DELETED ON THE PRELIMINARY POINT THE OTHER ARGUMENTS RAISED BY THE LD. COUNSEL FOR THE ASSESSEE ARE NOT BEING DEALT WITH. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 14 TH NOVEMBER , 2018 SD/ - SD/ - ( R AJESH KUMAR) ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 14 / 11 / 2018 GIRIDHAR , SR. PS 9 ITA NO.2344/MUM/2014 (A.Y: 2006 - 07) SHRI MOHD. ARIF SHAIKH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM