SAHAKAR DEVELOPERS, MUMBAI V. ACIT 25(2), MUMBAI

ITA 379/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0408 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 25-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK
• Keywords: Principle of natural justice
• Section: 133A; 144; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SHRI P.K. BANSAL, VICE-PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 379/MUM/2016 (ASSESSMENT YEAR- 2006-07) M/S SAHAKAR DEVELOPERS 5, SAI SADAN, ROSHAN NAGAR, BORIVALI (WEST), MUMBAI-400092 PAN: AANFS1752N VS. ACIT 25(2), C-11, 6 TH FLOOR, BKC, BANDRA(E), MUMBAI-400051. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIJAY MEHTA (AR) REVENUE BY : DR. A.K. NAYAK (DR) DATE OF HEARING : 13.06.2017 DATE OF PRONOUNCEMENT : 13.06.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE U/S. 253 OF THE INCOME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S)-44 [THE CIT(A)], MUMBAI DATED 06.01.2016 FOR THE ASSESSMENT YEAR 2006-07. T HE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: THE FOLLOWING GROUNDS OF APPEAL ARE WITHOUT PREJUD ICE TO EACH OTHER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PENALTY ORDER PASSED U/S 271(1)(C) IS IMPROPER, UNJUSTIFIED AND INCORRECT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LEARNED CIT(A)-44, BANDRA HAS ERRED IN FACTS AND IN LAW IN CONFIRMING THE PENALTY U/S 2 71 (1)( C)OF THE INCOME TAX ACT,1961 OF RS.15,03,365/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A)-44, BANDRA ERRED IN CONFIRMING THAT APPELLANT HAS CONCEALED TH E PARTICULARS OF INCOME BY FILING INACCURATE PARTICULARS OF INCOME AND THEREBY CONFIR MING THE PENALTY U/S 271 (1)(C) OF THE INCOME TAX ACT. ITA NO.379 /M/2016- M/S SAHAKAR DEVELOPERS 2 4. THE APPELLANT HAD DISCLOSED ITS INCOME BY FILING INCOME TAX SETTLEMENT PETITION AFTER SURVEY U/S 133A. HENCE, IT WAS KNOWN TO THE DEPARTM ENT AND WAS NOT UNDISCLOSED. 5. THE ASSESSED INCOME FOR THE YEAR WAS WORKED OUT ON THE BASIS OF ON-MONEY RATIO AND NET PROFIT RATIO DETERMINED IN EARLIER AY 2005-06 B Y ITSC. HENCE THERE WERE NO INACCURATE PARTICULARS OF INCOME SUBMITTED BY APPEL LANT. 6. THE PENALTY NOTICE DOES NOT SPECIFY WHETHER THE APPELLANT HAS CONCEALED THE INCOME OR HAS FURNISHED THE INACCURATE PARTICULARS OF SUCH INCOME. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. A SURVEY U/S 133A WAS CONDUCTED IN THE GROUP CONCERN OF ASSESSEE. AS A RESULT OF SURVEY, THE ASSESSEE DECLA RED ADDITIONAL INCOME OF RS.5.00/- CRORES OVER AND ABOVE THE REGULAR INCOME OF VARIOUS GROUP CONCERNS. THEREAFTER, THE ASSESSEE FILED APPLICATION U/S 245C OF THE ACT BEFORE THE SETTLEMENT COMMISSION. THE APPLICATION OF ASSESSEE FOR AY 2006 -07 WAS REJECTED BY SETTLEMENT COMMISSION. CONSEQUENT UPON THE ASSESSME NT ORDER U/S 144 WAS PASSED COMPUTING THE TOTAL INCOME OF ASSESSEE AT RS . 1,34,04,624/- AGAINST THE RETURNED INCOME OF RS. 14,16,814/- THEREBY AN ADDIT ION OF RS. 1,19,87,810/-. CONSEQUENT UPON THE PENALTY U/S 271(1)(C) WAS INITI ATED. THE ASSESSEE FILED APPEAL IN THE QUANTUM ASSESSMENT AND THE INCOME OF ASSESSE E WAS RESTRICTED TO RS.44,66,333/-. THE ASSESSING OFFICER (AO) ISSUED N OTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT. THE ASSESSEE FILED REPLY DATED 18.03.20 14. THE REPLY OF ASSESSEE WAS NOT ACCEPTED BY AO HOLDING THAT, HAD THERE BEEN NO SURVEY ACTION AGAINST THE ASSESSEE, THEN ADDITIONAL INCOME WOULD HAVE ESCAPED TO TAX. THE ASSESSEE FAILED TO OFFER ANY VALID EXPLANATION AND IT DEEM TO HAVE CON CEALED SUCH INCOME WITHIN THE MEANING OF SECTION 271)(1)(C) OF THE ACT. THE AO LE VIED THE PENALTY @ 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED AND CALCULATE D THE PENALTY OF RS.15,03,365/- ITA NO.379 /M/2016- M/S SAHAKAR DEVELOPERS 3 IN ORDER DATED 26.03.2014. ON APPEAL BEFORE THE LD. CIT(A), THE PENALTY WAS SUSTAINED. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE PRESENT APPEAL IS FILED BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE IN SUPPORT OF GROUND NO.1 OF THE APPEAL ARGUED THAT THE AO HAS NOT SPECIFIED THE S PECIFIC CHARGE WHILE ISSUING NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT, WHETHER THE PENALTY INITIATED FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS. THE LD. AR OF THE ASSESSEE FURTHER ARGUED THAT THE NON-STRIKING OF IR RELEVANT CLAUSE IN THE NOTICE SHOWS A NONE-APPLICATION OF MIND BY AO. THE LD. AR OF THE ASSESSEE PLACED ON RECORD THE COPY OF NOTICE U/S 274 R.W.S. 271(1)(C) DATED 31.12.2008. THE LD. AR OF THE ASSESSEE IN SUPPORT OF ITS SUBMISSION RELIED UP ON THE DECISION OF CO-ORDINATE BENCH IN CASE OF MEHERJEE CASSINATH HOLDINGS P. LTD . VS. ACIT (ITA NO. 2555/MUM/2012) DATED 28.04.2017, DECISION OF HONBL E BOMBAY HIGH COURT IN CASE OF CIT VS. SAMSON PERINCHARY (392 ITR 4), DECI SION OF HONBLE KARNATAKA HIGH COURT IN CIT VS. SSAS EMERALD MEADOWS (ITA NO . 380 OF 2015), IN CASE OF MUMBAI TRIBUNAL IN M/S. PRINCE CONSULTANCY P. LTD. (ITA NO. 6068/M/2016) DATED 13.01.2017, IN CASE OF MUMBAI TRIBUNAL IN PAK ASH H SAVLA (ITA NO. 3381/M/2015) DT. 11.11.2016 AND HONBLE SUPREME COU RT IN CASE OF CIT VS. SSAS EMERALD MEADOWS DATED 05.08.2016. ON THE OTHE R HAND, LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. T HE LD. AR OF THE ASSESSEE FURTHER ARGUED THAT ASSESSEE HAS NOT RAISED ANY SUC H ISSUE EITHER BEFORE THE AO ITA NO.379 /M/2016- M/S SAHAKAR DEVELOPERS 4 WHILE CONTESTING THE NOTICE OF PENALTY OR BEFORE T HE LD. CIT(A) IN FIRST APPEAL THAT THAT THE ASSESSEE SUFFERED ANY PREJUDICE OR WAS NOT AWARE ABOUT THE SPECIFIC CHARGE LEVIED AGAINST HIM. IT WAS FURTHER ARGUED THAT MERE NONE-STRIKING OUT OF IRRELEVANT CHARGE IN THE NOTICE U/S 274 R.W.S. 271(1)(C) OF TH E ACT IS NOT FATAL. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDER OF AUTHORITIES BELOW. WE HAVE ALSO GONE THROU GH THE NOTICE DATED 31.12.2008 U/S 274 R.W.S. 271(1)(C) OF THE ACT. THE AO ISSUED A NOTICE ON STANDARD PERFORMA WITHOUT STRIKING OUT THE IRRELEVANT CLAUSE. THUS, T HE NOTICE REFERS TO BOTH THE LIMBS OF SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT OF PARTICULARS OF INCOME AS WELL AS FURNISHING INACCURATE PARTICULARS OF INCOME, NONE-S TRIKING OF THE IRRELEVANT LIMBS OF THE SAID NOTICE DOES NOT CONVEY TO THE ASSESSEE AS TO WHICH OF THE TWO CHARGE IT HAS TO RESPOND. THE LD. AR OF THE ASSESSEE DEMONSTRATED THAT NONE-STRIKING OF RELEVANT CLAUSE SHOWS A NONE-APPLICATION OF MIND BY THE AO. THE LD. AR OF THE ASSESSEE BESIDES THE OTHER DECISION RELIED ON THE DECISION O F CO-ORDINATE BENCH IN CASE OF MEHERJEE CASSINATH HOLDINGS P. LTD. (SUPRA), WHEREI N ONE OF US IS A CO-AUTHOR OF THE SAID DECISION, THE CO-ORDINATE BENCH OF THIS TR IBUNAL AFTER CONSIDERING THE VARIOUS DECISIONS OF SIMILAR ARGUMENTS AS ARGUED BY LD. AR OF THE ASSESSEE AND LD. DR FOR THE REVENUE PASSED THE FOLLOWING ORDER: 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. SEC. 271(1)(C) OF THE ACT EMPOWERS THE ASSESSING OFFICER TO IMPOSE PENALTY TO THE EXTE NT 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 EXISTENCE OF ANY OF THE TWO SITUATIONS, NAMELY, FOR CONCEALING THE PARTICUL ARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, IT IS OBVIOUS FRO M 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) OF THE ACT EXIST. IT IS ALSO A WELL ACCEP TED PROPOSITION THAT 'CONCEALMENT OF THE PARTICULARS OF INCOME' AND 'FURNISHING OF INACCURAT E PARTICULARS OF INCOME' REFERRED TO IN SEC. ITA NO.379 /M/2016- M/S SAHAKAR DEVELOPERS 5 271(1)(C) OF THE ACT DENOTE DIFFERENT CONNOTATIONS. IN FACT, THIS DISTINCTION HAS BEEN APPRECIATED EVEN AT THE LEVEL OF HON'BLE SUPREME CO URT 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, NAMELY '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 AGAI NST HIM FOR THE PURPOSE OF LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, SO THAT THE ASSES SEE CAN DEFEND ACCORDINGLY. IT IS IN THIS BACKGROUND THAT ONE HAS TO APPRECIATE THE PRELIMINA RY 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 IRRELEV ANT CLAUSE. IN OTHER WORDS, THE NOTICE REFERS TO BOTH THE LIMBS OF SEC. 271(1)(C) OF THE ACT, NAM ELY CONCEALMENT OF THE PARTICULARS OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICUL ARS 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 INFIRM ITY 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 S PECIFIC 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 STANDAR D PROFORMA USED BY THE ASSESSING OFFICER IN ISSUING A NOTICE DESPITE 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 P ROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED HIS INCOME OR HE HAD FURNISH ED 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 SITUA TIONS. 84. THE IMPUGNED ORDER, THEREFORE, SUFFERS FROM NON -APPLICATION OF MIND. IT WAS ALSO BOUND TO COMPLY WITH THE PRINCIPLES OF NATURAL JUST ICE. ( SEE MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 2 SCC 718]' 9. FACTUALLY SPEAKING, THE AFORESAID PLEA OF ASSESS EE 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 P ROPOSITION WAS ALSO ENUNCIATED BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF M/S. SS A'S 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 D ATED 5.8.2016, A COPY OF 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 O F MIND BY THE ASSESSING OFFICER WHICH CAN BE DEMONSTRATED FROM THE DISCUSSION IN THE ASSESSME NT ORDER, WHEREIN AFTER DISCUSSING THE REASONS FOR THE DISALLOWANCE, HE HAS RECORDED A SAT ISFACTION THAT PENALTY PROCEEDINGS ARE INITIATED U/S 271(1)(C) OF THE ACT FOR FURNISHING O F INACCURATE PARTICULARS OF INCOME. IN OUR CONSIDERED OPINION, THE ATTEMPT OF THE LD. CIT-DR T O DEMONSTRATE APPLICATION OF MIND BY THE ASSESSING OFFICER IS NO DEFENCE INASMUCH AS THE HON 'BLE SUPREME COURT HAS APPROVED THE ITA NO.379 /M/2016- M/S SAHAKAR DEVELOPERS 6 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'BL E SUPREME COURT, WE PROCEED TO REJECT THE ARGUMENTS ADVANCED BY THE LD. CIT-DR BASED ON T HE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. FURTHER, IT IS ALS O NOTICEABLE THAT SUCH PROPOSITION HAS BEEN CONSIDERED BY (SUPRA) AND THE DECISION OF THE TRI BUNAL HOLDING LEVY OF PENALTY IN SUCH CIRCUMSTANCES BEING BAD, HAS BEEN APPROVED. 11. APART FROM THE AFORESAID, THE LD. CIT-DR MADE A N ARGUMENT BASED ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SMT. KAUSH ALYA & OTHERS, 216 ITR 660 (BOM.) TO CANVASS SUPPORT FOR HIS PLEA THAT NON-STRIKING O FF 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 BEFORE 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 COURT IN THE CASE OF DILIP N. SHROFF (SUPRA) AND DHARMEND RA TEXTILE PROCESSORS, 306 ITR 277 (SC) DEDUCED AS UNDER :- '12. A COMBINED READING OF THE DECISION RENDERED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF SMT. B KAUSHALYA AND OTHERS (SUPRA) AND THE DECISION RENDERED BY HON'BLE 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 274 FOR CONCEALMENT OF PARTICULARS OF INCOME BUT LEVIED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HON'BLE GUJARAT HIGH COURT QUASHED THE PENALTY SINCE THE BA SIS FOR THE PENALTY PROCEEDINGS DISAPPEARED WHEN IT WAS HELD THAT THERE WAS NO SUPP RESSION OF INCOME. THE HON'BLE KERALA HIGH COURT HAS STRUCK DOWN THE PENALTY IMPOS ED IN THE CASE OF N.N.SUBRAMANIA IYER VS. UNION OF INDIA (SUPRA), WHEN THERE IS NO I NDICATION IN THE NOTICE FOR WHAT CONTRAVENTION THE PETITIONER WAS CALLED UPON TO SHO W CAUSE WHY A PENALTY SHOULD NOT BE IMPOSED. IN THE INSTANT CASE, THE AO DID NOT SPECIF Y THE CHARGE FOR WHICH PENALTY PROCEEDINGS WERE INITIATED AND FURTHER HE HAS ISSUE D A NOTICE MEANT FOR CALLING THE ASSESSEE TO FURNISH THE RETURN OF INCOME. HENCE, IN THE INSTANT CASE, THE ASSESSING OFFICER DID NOT SPECIFY THE CHARGE FOR WHICH THE PENALTY PR OCEEDINGS 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 TO THE ASSESSEE AND HE WAS NOT SURE AS TO WHAT PURPOSE THE NOTICE WAS ISSUED. THE HON'BLE BOM BAY HIGH COURT HAS DISCUSSED ABOUT NON-APPLICATION OF MIND IN THE CASE OF KAUSHA LYA (SUPRA) AND OBSERVED AS UNDER:- '....THE NOTICE CLEARLY DEMONSTRATED NON-APPLICATIO N 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 GROUND, QUASHIN G 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 T HE AO HAS ISSUED A NOTICE, THAT TOO INCORRECT ONE, IN A ROUTINE MANNER. FURTHER THE NOTICE DID NO T SPECIFY THE CHARGE FOR WHICH THE PENALTY NOTICE WAS ISSUED. HENCE, IN OUR VIEW, THE AO HAS F AILED TO APPLY HIS MIND AT THE TIME OF ISSUING PENALTY NOTICE TO THE ASSESSEE.' ITA NO.379 /M/2016- M/S SAHAKAR DEVELOPERS 7 12. THE AFORESAID DISCUSSION CLEARLY BRINGS OUT AS TO THE REASONS WHY THE PARITY OF REASONING 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 T HE CASE OF DR. SARITA MILIND DAVARE (SUPRA), WE HEREBY REJECT THE AFORESAID ARGUMENT OF THE LD. CIT-DR. 13. APART FROM THE AFORESAID DISCUSSION, WE MAY ALS O 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 EA RLIER, IN THE ASSESSMENT ORDER DATED 10.12.2010 THE ASSESSING OFFICER RECORDS THAT THE P ENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE TO BE INITIATED FOR FURNISHING OF INACCURAT E PARTICULARS OF INCOME. HOWEVER, IN THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT O F EVEN DATE, BOTH 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 CLAUSE IN THE NOTICE CLEARLY BRINGS OUT THE DIFFIDENCE ON THE PART OF ASSESSING OFFICER AND THE RE IS NO CLEAR AND CRYSTALLISED CHARGE BEING CONVEYED TO THE ASSESSEE U/S 271(1)(C), WHICH HAS T O 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 PRINC IPLES OF NATURAL JUSTICE, AND IN THE PRESENT CASE, CONSIDERING THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ALONGSIDE HIS ACTION OF NON-STRIKING OFF OF THE IRRELEVANT CL AUSE 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 PRINCIP LES OF NATURAL JUSTICE INASMUCH 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 RESPON D. 14. THEREFORE, IN VIEW OF THE AFORESAID DISCUSSION, IN OUR VIEW, THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 274 R.W.S. 271(1)(C) OF THE A CT DATED 10.12.2010 IS UNTENABLE AS IT SUFFERS FROM THE VICE OF NON- APPLICATION OF MIND H AVING 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 JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SHR I SAMSON PERINCHERY (SUPRA). THUS, ON THIS COUNT ITSELF THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT IS LIABLE TO BE DELETED. 5. CONSIDERING THE DECISION OF CO-ORDINATE BENCH, WE F IND THAT AO FAILED TO SATISFY THE SPECIFIC CHARGE ON WHICH THE PENALTY WAS PROPOS ED U/S 271(1)(C) OF THE ACT. THUS, CONSIDERING THE VARIOUS DECISIONS OF HONBLE APEX COURT AS REFERRED BY US, THE HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS. SA MSON PERINCHARY (SUPRA), WE ALLOWED THE GROUND NO.1 RAISED BY ASSESSEE IN THE P RESENT APPEAL HOLDING THAT THE PENALTY ORDER IS BAD-IN-LAW. AS WE HAVE ALLOWED GRO UND NO.1 OF THE PRESENT APPEAL. THUS, THE DISCUSSION ON OTHER GROUNDS OF AP PEAL IS BECOME ACADEMIC. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.379 /M/2016- M/S SAHAKAR DEVELOPERS 8 ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH DAY OF JUNE 2017. SD/- SD/- (VICE-PRESIDENT) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 13 /06/2017 S.K.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/