ASHOK KHANDELWAL, MUMBAI V. ITO WD 25(3)(3), MUMBAI

ITA 3254/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9828 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 03-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 09-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Keywords: Principle of natural justice; Question of law; Bonafide mistake

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 3254 / MUM/20 1 6 ( ASSESSMENT YEAR : 2010 - 11 ) SHRI ASHOK KHANDELWAL A - 2703/2704, OBEROI WOODS, NEAR SAI BABA COMPLEX, GOREGAON (E), MU MBAI VS. ITO WD 25 (3)(3), BANDRA KURLA COMPLEX MUMBAI PAN/GIR NO. ABTPK4147N APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI NEELKANTH KHANDELWAL REVENUE BY SHRI M.C.OMI NINGSHEN DATE OF HEARING 03 / 05 /201 7 DATE OF PRONOUNCE ME NT 26 / 07 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 45, MUMBAI DATED 30/12/2016 IN THE MATTER OF IMPOSITION OF PENALTY U/S.271 (1)(C) AMOUNTING TO RS.3,28,610/ - . 2 . THE RE IS A DELAY OF 34 DAYS IN FILING AN APPEAL. WE HAD GONE THROUGH THE REASONS GIVEN FOR DELAY IN FILING APPEAL. WE HAD ALSO GONE THROUGH THE AFFIDAVIT IN SUPPORT OF THE SAME. WE ARE SATISFIED THAT THERE W ERE SUFFICIENT REASON S FOR DELAY IN FILING THE APPEA L, THEREFORE, IN THE SUBSTANTIAL INTEREST OF JUSTICE, WE CONDONE THE DELAY AND APPEAL IS HEARD ON MERIT. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. ITA NO. 3254/MUM/2016 SHRI ASHOK KHANDELWAL 2 4. FACTS IN BRIEF ARE THAT ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM CAPITAL GAIN AND HOU SE PROPERTY. DURING THE COURSE OF SCRUTINY ASSESSMENT AO FOUND THAT ASSESSEE HAS NOT DISCLOSED LONG TERM CAPITAL GAIN. ON ASKING BY THE AO, ASSESSEE FILED REVISED COMPUTATION DULY INCORPORATING THE CAPITAL GAIN AND ALSO PAID TAX THEREON. HOWEVER, THE AO AL SO INITIATED PENALTY U/S.271(1)(C) WHICH WAS CONFIRMED BY THE CIT(A) AND ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. IT WAS SUBMITTED BY LEARNED AR THAT REVISED COMPUTATION WAS FILED B Y THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF AND THAT NON - INCLUSION OF THE CAPITAL GAINS IN THE RETURN OF INCOME IS ATTRIBUTABLE TO THE MISTAKE OF THE CHARTERED ACCOUNTANT FILING THE RETURN OF INCOME AND THE ASSESSEE SHOULD NOT BE SADDLED WITH PENALTY U/S. 271(1)(C) FOR THE MISTAKE OF A CA - PRICE WATERHOU SE COOPERS 348 ITR 306 (SC). 6. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS MENTIONED IN THE ASSESSMENT ORDER THAT THE PENALTY UNDER SECTION 271(1)(C) IS INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. HOWEVER, THE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271 IS A STEREOTYPE ONE NOT TICK MARKED FOR WHICH LIMB OF THE TWO LIMBS TO SECTION 271(1)(C) THE PENALTY IS INITIATED; AND THUS, THE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271 ITSELF IS FAULTY IN AS MUC H AS THERE IS NON - APPLICATION OF MIND BY THE ASSESSING OFFICER. AS SUCH, THE PENALTY ORDER PASSED U/S.271(1)(C) OUGHT TO BE QUASHED. 7. IN SUPPORT OF THE ABOVE PROPOSITION, RELIANCE WAS PLACED ON THE DECISION OF CO - ORDINATE BENCH IN CASE OF WADHWA ESTATE & DEVELOPERS ITA NO. 3254/MUM/2016 SHRI ASHOK KHANDELWAL 3 INDIA PVT. LTD., ITA NO.2158/MUM/2016 DATED 24/02/2017, WHEREIN BENCH HELD AS UNDER: - 3. LEARNED AUTHORISED REPRESENTATIVE REITERATING THE STAND TAKEN BEFORE THE DEPARTMENTAL AUTHORITIES SUBMITTED THAT THE ASSESSEE THOUGH, WAS HAVING A NUMBER OF FIXED DEPOSIT IN DIFFERENT BANKS, HOWEVER, HE HAS OFFERED TO TAX INTEREST RECEIVED FROM ALL FIXED DEPOSITS EXCEPT ONE. HE SUBMITTED, THE LAPSE IN OFFERING THE INTEREST EARNED ON FIXED DEPOSIT WAS DUE TO OVERSIGHT ON THE PART OF THE ACCOUNTANT BECAUSE OF THE FACT THAT THOUGH ASSESSEES ACCOUNTS ARE SUBJECT TO TAX AUDIT AS WELL AS STATUTORY AUDIT, HOWEVER, THE MISTAKE IN NOT OFFERING THE INTEREST INCOME ON FIXED DEPOSIT WAS NOT POINTED OUT BY EITHER OF THE AUDITORS. THEREFORE, HE SUBMITTED, IT IS A GENUINE MISTAKE DUE TO OVERSIGHT AND ONCE IT CAME TO THE NOTICE OF THE ASSESSEE THE INCOME WAS OFFERED TO TAX. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, THE SAME IS THE CASE WITH THE CLAIM OF LOSS ON ACCOUNT OF WRITE OFF OF FIXED ASSET AMOUNTING TO ` 1,82, 242. LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, AS THE NON DISCLOSURE OF INCOME WAS DUE TO BONAFIDE MISTAKE, IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) IS IMPROPER. FOR SUCH PROPOSITION, HE RELIED UPON THE FOLLOWING DECISIONS: I) PRICE WATER HOUSE CO OPERS PVT. LTD. V/S CIT, 348 ITR 306; II) DCIT V/S KODAK INDIA PVT. LTD., ITA NO.1533/MUM./2014 DATED 05.12.2016; AND III) CIT V/S DALMIYA DIECHEM INDUSTRIES LTD., ITA NO.1396/ MUM./2013, DATED 06.07.2015. 4. THE LEARNED AUTHORISED REPRESENTATIVE DRAWING O UR ATTENTION TO ASSESSMENT ORDER SUBMITTED, THE ASSESSING OFFICER HAS NOT RECORDED HIS SATISFACTION WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF ITS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. HE SUBMITTED, IN THE NOTICE ISSUED UNDER SECTION 274 R/W 271(1)(C) ALSO THE ASSESSING OFFICER HAS NOT SPECIFIED WHICH LIMB OF SECTION 271(1)(C) IS ATTRACTED BY STRIKING OFF ONE OF THEM. THEREFORE, HE SUBMITTED, THE IMPOSITION OF PENALTY IS BAD IN LAW. IN THIS CONTEXT, HE RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S SAMSON PERINCHERY, ITA NO.1154/2014 DATED 5TH JANUARY 2017. 5. LEARNED DEPARTMENTAL REPRESENTATIVE RELYING UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) SUBMITTED, AS THE ASSESSEE HAS DELIBERATELY NOT OFFERED TO TAX INCOME AND WHICH CAME TO THE NOTICE OF THE ASSESSING OFFICER ONLY BECAUSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS THE IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) IS JUSTIFIED. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY, IN THE RETURN OF INCOME ASSESSEE HAS FAILED TO OFFER INTEREST ON FIXED DEPOSIT AMOUNTING TO RS. 5,92,186 AND LOSS CLAIMED ON ACCOUNT OF FIXED ASSET WRITTEN OFF AMOUNTING TO RS. 1,82,242. IT IS ALSO A FACT ON RECORD THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE ACCEPTED THE TAXABILITY OF THESE ITEMS OF INCOME AND OFFERED THEM TO TAX. THE ASSESSEE HAS EXPLAINED THAT NON DISCLOSURE OF AFORESAID TWO ITEMS OF INCO ME IS DUE TO OVERSIGHT AND DUE TO THE FACT THAT NEITHER IN THE TAX AUDIT NOR IN THE STATUTORY AUDIT SUCH OMISSION WAS POINTED OUT. WE FIND MERIT IN THE AFORESAID EXPLANATION OF THE ASSESSEE. IN FACT, IN PARA 4.3.2 OF HIS ORDER, THE LEARNED COMMISSIONER (AP PEALS) HAS OBSERVED THAT THE EXPLANATION OFFERED BY THE ASSESSEE WITH REGARD TO IMPOSITION OF PENALTY HAS NOT BEEN FOUND TO BE FALSE. ON A PERUSAL OF THE AUDIT REPORT, WE HAVE ALSO NOTED THAT THE AUDITORS HAVE NOT POINTED OUT THE OMISSION. THUS, ASSESSEES EXPLANATION THAT NON DISCLOSURE OF ITA NO. 3254/MUM/2016 SHRI ASHOK KHANDELWAL 4 TWO ITEMS OF INCOME IS ON ACCOUNT OF OMISSION DUE TO OVERSIGHT IS BELIEVABLE SINCE THE AUDITORS HAVE ALSO FAILED TO DETECT SUCH OMISSION IN THE AUDIT REPORT. THEREFORE, IN OUR OPINION, THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN PRICEWATERHOUSECOOPERS PVT. LTD. (SUPRA), CLEARLY APPLIES TO THE FACTS OF THE PRESENT CASE AS, IN OUR OPINION, IT IS A BONAFIDE MISTAKE COMMITTED BY THE ASSESSEE. THE OTHER DECISION RELIED UPON BY THE LEARNED AUTHORISED REPRESENTATIVE ALSO SUPPORT SUCH VIEW. THAT BEING THE CASE, IN OUR OPINION, IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) IN THE PRESENT CASE IS NOT JUSTIFIED. EVEN OTHERWISE ALSO, THE PENALTY IMPOSED UNDER SECTION 271(1)(C) IS NOT SUSTAINABLE DUE TO THE FOLLOWING REASONS: 7. PERUSAL OF THE ASSESSMENT ORDER CLEARLY DEMONSTRATE THAT THE ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION WHETHER THE FACTS OF THE CASE NECESSITATE INITIATION OF PROCEEDING FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) EITHER FOR CONCEALING P ARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR FOR BOTH. THE ASSESSING OFFICER HAS SIMPLY INITIATED THE PROCEEDINGS FOR PENALTY UNDER SECTION 271(1)(C) WITHOUT MENTIONING THE OFFENCE COMMITTED BY THE ASSESSEE WITH REFERENCE TO T HE PROVISIONS CONTAINED UNDER SECTION 271(1)(C). FURTHER, ON A REFERENCE TO THE NOTICE ISSUED UNDER SECTION 274 R/W SECTION 271, WHICH IS IN A STANDARD PRINTED FORMAT, A COPY OF WHICH IS PLACED AT PAGE 17 OF THE PAPER BOOK, WE HAVE FOUND THAT THE ASSESSING OFFICER HAS NOT SPECIFIED WHICH LIMB OF THE PROVISION CONTAINED UNDER SECTION 271(1)(C) IS ATTRACTED TO THE ASSESSEE. THE HON'BLE SUPREME COURT IN DILIP N. SHROFF V/S JCIT, [2007] 291 ITR 519 (SC), HAS OBSERVED THAT WHILE ISSUING THE NOTICE UNDER SECTION 274 R/W SECTION 271, IN THE STANDARD FORMAT, THE ASSESSING OFFICER SHOULD DELETE THE INAPPROPRIATE WORDS OR PARAGRAPHS, OTHERWISE, IT MAY INDICATE THAT THE ASSESSING OFFICER HIMSELF WAS NOT SURE AS TO WHETHER HE HAD PROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED HIS INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME. THIS, ACCORDING TO THE HON'BLE SUPREME COURT, DEPRIVES THE ASSESSEE OF A FAIR OPPORTUNITY TO EXPLAIN ITS STAND, THEREBY, VIOLATES THE PRINCIPLES OF NATURAL JUSTICE. AS HELD BY THE HON'BLE SUPREME COURT IN CIT V/S RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 (SC), THE AFORESAID PRINCIPLE LAID IN DILIP N. SHROFF (SUPRA) STILL HOLDS GOOD IN SPITE OF THE DECISION OF THE HON'BLE SUPREME COURT IN UOI V/S DHARMENDRA TEXTILE PROCESS ORS (2008) 306 ITR 277 (SC). THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S SMT. KAUSHALYA & ORS., [1995] 216 ITR 660 (BOM), OBSERVED THAT NOTICE ISSUED UNDER SECTION 274 MUST REVEAL APPLICATION OF MIND BY THE ASSESSING OFFICER AND THE ASSESSEE MUST BE M ADE AWARE OF THE EXACT CHARGE ON WHICH HE HAD TO FILE HIS EXPLANATION. THE COURT OBSERVED, VAGUENESS AND AMBIGUITY IN THE NOTICE DEPRIVES THE ASSESSEE OF REASONABLE OPPORTUNITY AS HE IS UNAWARE OF THE EXACT CHARGE HE HAS TO FACE. THE HON'BLE JURISDICTIONAL HIGH COURT IN SAMSON PERINCHERY (SUPRA), FOLLOWING THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN CIT V/S MANJUNATHA COTTON & GINNING FACTORY, [2013] 359 ITR 565 (KAR.), HELD, ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND ON WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED. IN THE PRESENT CASE, NEITHER THE ASSESSMENT ORDER NOR THE NOTICE ISSUED UNDER SECTION 274 INDICATE THE EXACT CHARGE ON THE BASIS OF WHICH THE ASSESSING OFFICER INTENDS TO IMPOSE PENALTY UNDER SECTION 271(1)(C). THEREFORE, VI EWED IN THE LIGHT OF THE PRINCIPLES LAID DOWN IN THE JUDICIAL PRECEDENTS DISCUSSED HEREIN ABOVE, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER HAVING FAILED TO RECORD HIS SATISFACTION WHILE INITIATING PROCEEDINGS FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) AS TO WHICH LIMB OF THE PROVISIONS OF SECTION 271(1)(C) IS ATTRACTED, THE ORDER ITA NO. 3254/MUM/2016 SHRI ASHOK KHANDELWAL 5 IMPOSING PENALTY IS INVALID. IN VIEW OF THE AFORESAID, WE HOLD THAT THE IMPOSITION OF PENALTY U/S 271(1)(C) IN THE PRESENT CASE IS NOT JUSTIFIED. ACCORDINGLY, WE DELE TE THE SAME. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. 8. THERE CAN BE NO DOUBT THAT PENALTY U/S. 271(1)(C) OF THE ACT IS LEVIED FOR CONCEALING PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME, WHICH ARE THE TWO LIMBS OF THIS PROVISION. IN OTHER WORDS, IT IS ONLY WHEN THE AUTHORITY INVESTED WITH THE REQUISITE POWER IS SATISFIED THAT EITHER OF THE TWO EVENTS EXISTED IN A PARTICULAR CASE THAT PROCEEDINGS U/S. 271(1)(C) OF THE ACT ARE INITIATED. THIS PRE - REQUISITE SHOULD INV ARIABLY BE EVIDENT FROM THE NOTICE ISSUED U/S. 274 R.W.S. 271 OF THE ACT, WHICH IS THE JUR ISDICTIONAL NOTICE, FOR VISITING AN ASSESSEE WITH THE PENAL PROVISION. THE INTENT AND PURPOSE OF THIS NOTICE IS TO INFORM THE ASSESSEE AS TO THE SPECIFIC CHARGE FOR WHICH HE HAS BEEN SHOW CAUSED SO THAT HE COULD FURNISH HIS REPLY WITHOUT ANY CONFUSION AND TO THE POINT. IN THE PRESENT CASE, NEITHER THE ASSESSEE NOR ANYONE ELSE COULD MAKE OUT AS TO WHETHER THE NOTICE U/S. 274 R.W.S. 271 OF THE ACT WAS ISSUED FOR CONCEAL ING THE PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME DISABLING IT TO MEET WITH THE CASE OF THE ASSESSING OFFICER. THERE ARE A CATENA OF JUDGMENTS HIGHLIGHTING THE NECESSITY FOR IDENTIFYING THE CHARGE FOR WHICH THE ASSESSEE IS BEING VISITED A ND IN ALL THOSE DECISIONS, HON'BLE COURTS HAVE REPEATEDLY HELD THAT WHERE THE JURISDICTIONAL NOTICE IS VAGUE, SIMILAR TO THE ONE IN THE PRESENT CASE, THE CONSEQUENT LEVY CANNOT BE SUSTAINED. ITA NO. 3254/MUM/2016 SHRI ASHOK KHANDELWAL 6 9 . IN THIS CONNECTION, RELIANCE IS FIRST PLACE D UPON THE JUDGMENT OF THE HON'B L E KARNATAKA HIGH COURT IN THE CASE OF CIT V. MANJUNATHA COTTON AND GIN NING FACTORY & ORS. AND VEERABHADRAPPA SANGAPPA AND CO. (359 ITR 565, 577, 601, 603 - 604) IN WHICH THE FACTS ARE SIMILAR. IN THOSE BUNCH OF TAX APPEALS, S EVERAL ASSESSEE AND SEVERAL ISSU ES WERE INVOLVED. IN SO FAR AS I. T.A. NO. 5020 OF 2009 WAS CONCERNED, ONE OF THE SUBSTANTIAL QUESTIONS ON WHICH THE APPEAL WAS FILED BY THE REVENUE WAS: 'WHETHER THE NOTICE ISSUED UNDER SECTION 271(1)(C) IN THE PRINTED FORM WITHOUT SPECIFICALLY MENTIONING WHETHER THE PROCEEDINGS ARE INITIATED ON THE GROUND OF CONCEALMENT OF INCOME OR ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS IS VALID AND LEGAL?' 10. WHILE ANSWERING THE ABOVE IN FAVOUR OF THE ASSESSEE, THE FOLLOWIN G FINDINGS WERE RECORDED BY THE HON'BLE COURT: '61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PART ICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT THUS, THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CAS E OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF ASHOK PAI REPORTED IN [2007] 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT H IGH COURT IN THE CASE OF MANU ENGINEERING WORKS REPORTED IN [1980] 122 ITR 306 (GUJ) AND THE DELHI HIGH COURT IN THE CASE OF CIT V. VIRGO MARKETING P LTD REPORTED IN [2008 171 TAXMAN 156 HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHIC H IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ITA NO. 3254/MUM/2016 SHRI ASHOK KHANDELWAL 7 ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. '(P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C) I.E. WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME. THE STANDARD PROFORMA W ITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON - APPLICATION OF MIND. 11. THEREAFTER, IN SO FAR AS THE MANNER IN WHICH THE STATUTORY NOTICE WAS REQUIRED TO BE ISSUED, THE HON'BLE COURT CONCLUDED THUS: ( P) NOTICE U/S 274 OF THE ACT SHOULD BE SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E. WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME. 12. FINALLY, IN CONCURRING WITH THE FINDINGS RECORDED IN THE ORDER OF THE TRIB UNAL, IT WAS HELD THUS: 66. IN VIEW OF THE AFORESAID LAW, WE ARE OF THE VIEW THAT THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE ENTIRE PROCEEDINGS ARE VITIATED AS THE NOTICE ISSUED IS NOT IN ACCORDANCE WITH LAW AND ACCORDINGLY JUSTIFIED IN INTERFERING WI TH THE ORDER PASSED BY THE APPELLATE AUTHORITY AS WELL AS THE ASSESSING AUTHORITY AND IN SETTING ASIDE THE SAME. HENCE, WE ANSWER THE SUBSTANTIAL QUESTIONS OF LAW FRAMED IN THIS CASE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ' 13. THE AFORESAID JUDGMENT WAS UNSUCCESSFULLY CHALLENGED BY THE REVENUE BEFORE THE SUPREME COURT, AS IT WAS REJECTED VIDE PETITION FOR SPECIAL LEAVE TO APPEAL (C) NO. 13898/2014 DATED 11.07.2016 . RELIANCE WAS NEXT PLACED UPON ANOTHER JUDGMENT OF THE HON'BLE KARNATAKA HIGH ITA NO. 3254/MUM/2016 SHRI ASHOK KHANDELWAL 8 COURT IN T HE CASE CIT V. SSA'S EMERALD MEADOWS (INCOME TAX APPEAL NO. 380 OF 2015 DECIDED ON 23.11.2016). IN THIS CASE ALSO S SIMILAR SITUATION AROSE IN AS MUCH AS THE HONBLE COURT WAS REQUIRED TO ADJUDICATE ON THE FOLLOWING SUBSTANTIAL QUESTION: (1) WHE THER, OMISSION OF ASSESSING OFFICER TO EXPLICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED B EYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE?' 14 . THE AFORESAID QUESTION WAS DEALT WITH BY THE HONBLE COURT IN FAVOUR OF THE ASSESSEE IN THE FOLLOWING WORDS: 3. THE TRIBUNAL HAS ALLOWED THE A PPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME - TAX ACT 1961 (FOR SHORT 'THE ACT; TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT T HE PENALTY PROCEEDINGS HAD BEEN INITIATED LE. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNEL WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF TH IS COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT WE ARE OF THE OPINION NO SUBSTANTIAL QUEST ION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. ITA NO. 3254/MUM/2016 SHRI ASHOK KHANDELWAL 9 15. THE SLP FILED BY THE DEPARTMENT IN THE AFORESAID CASE ALSO WAS DISMISSED BY THE HON'BLE SUPREME COURT VIDE PETITION FOR SPECIAL LEAVE TO APPEAL (C ) NO .... ./2016 (CC NO. 11485/2016) DATED 05.08.2016. 16 . THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. SHRI SAMSON PERINCHERY [INCOME TAX APPEAL NO. 1154 OF 2014 AND OTHERS DATED 05.01.2017] HAD ALSO OCCASION TO CONSIDER A SIMILAR ISSUE. I N THIS CASE, THOUGH PROCEEDINGS U/S. 271(1)(C) OF THE ACT WERE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, IN THE NOTICE ISSUED U/S. 274 R.W.S. 271 OF THE ACT IN THE STANDARD FORM, THE CHARGE FOR WHICH IT WAS ISSUED WAS ALSO NOT IDENTIFIE D, AS IN THE PRESENT CASE. IN DELETING THE LEVY, SO FAR AS NON - SPECIFICATION OF THE DEFAULT IN THE JURISDICTIONAL NOTICE, THE FOLLOWING FINDINGS WERE RECORDED BY THE HON'BLE BOMBAY HIGH COURT: '7 THEREFORE, THE ISSUE HEREIN STANDS CONCLUDED IN FAVOUR OF T HE RESPONDENT - ASSESSEE BY THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY (SUPRA). NOTHING HAS BEEN SHOWN TO US IN THE PRESENT FACTS WHICH WOULD WARRANT OUR TAKING A VIEW DIFFERENT FROM THE KARNATAKA HIGH COURT IN THE CASE OF MENJUNETH COTTON AND GINNING FACTORY (SUPRA). 8. IN VIEW OF THE ABOVE, THE QUESTION AS FRAMED DO NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW THUS, NOT ENTERTAINED' 17. THE HON'BLE SUPREME COURT IN DILIP N. SHROFF V/S JCIT, [2007] 291 ITR 519 (SC), HAS OBSERVED THAT WHILE ISSUING THE NOTICE UNDER SECTION 274 R/W SECTION 271, IN THE STANDARD FORMAT, THE ASSESSING OFFICER SHOULD DELETE THE INAPPROPRIATE WORDS OR PARAGRAPHS, OTHERWISE, IT MAY INDICATE THAT THE ASSESSING OFFICER HIMSELF WA S NOT SURE AS TO WHETHER HE HAD ITA NO. 3254/MUM/2016 SHRI ASHOK KHANDELWAL 10 PROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED HIS INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME. THIS, ACCORDING TO THE HON'BLE SUPREME COURT, DEPRIVES THE ASSESSEE OF A FAIR OPPORTUNITY TO EXPLAIN ITS ST AND, THEREBY, VIOLATES THE PRINCIPLES OF NATURAL JUSTICE. AS HELD BY THE HON'BLE SUPREME COURT IN CIT V/S RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 (SC), THE AFORESAID PRINCIPLE LAID IN DILIP N. SHROFF (SUPRA) STILL HOLDS GOOD IN SPITE OF THE DEC ISION OF THE HON'BLE SUPREME COURT IN UOI V/S DHARMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277 (SC). THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S SMT. KAUSHALYA & ORS., [1995] 216 ITR 660 (BOM), OBSERVED THAT NOTICE ISSUED UNDER SECTION 274 MUST REVEAL APPLICATION OF MIND BY THE ASSESSING OFFICER AND THE ASSESSEE MUST BE MADE AWARE OF THE EXACT CHARGE ON WHICH HE HAD TO FILE HIS EXPLANATION. THE COURT OBSERVED, VAGUENESS AND AMBIGUITY IN THE NOTICE DEPRIVES THE ASSESSEE OF REASONABLE OPPORTUNITY AS HE I S UNAWARE OF THE EXACT CHARGE HE HAS TO FACE. THE HON'BLE JURISDICTIONAL HIGH COURT IN SAMSON PERINCHERY (SUPRA), FOLLOWING THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN CIT V/S MANJUNATHA COTTON & GINNING FACTORY, [2013] 359 ITR 565 (KAR.), HELD, ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND ON WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED. 18. IN ADDITION TO THE AFORESAID BINDING JUDGMENTS, THERE ARE SEVERAL ORDERS PASSED BY CO - ORDINATE BENCHES OF T HE TRIBUNAL ON THIS VERY POINT. IN ALL TH OSE ORDERS ALSO PENALTY LEVIED U S. 271(L)(C) OF THE ACT ON THE BASIS OF SIMILAR VAGUE NOTICE WAS CANCELLED. ITA NO. 3254/MUM/2016 SHRI ASHOK KHANDELWAL 11 19. IN VIEW OF THE ABOVE DISCUSSIONS, WE DO NOT FIND ANY MERIT FOR THE PENALTY SO IMPOSED., ACCORDINGLY, AO IS DIRECTED TO DELETE THE PENALTY OF RS .3,28,610/ - SO IMPOSED U/S. 271(1)(C) OF THE IT ACT. 2 0 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 26 / 07 /2017 S D/ - ( SANDEEP GOSAIN ) S D/ - ( R.C.SHARMA ) JU DICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 26 / 07 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//