HAKIMMUDIN MANSOORALI PLASTICWALA, MUMBAI V. ITO 13(1)(3), MUMBAI

ITA 3927/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0157 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2011-2012
• Appeal Filed On: 04-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BHADRESH K DOSHI
• Assessee Lawyers: ADAGIRI
• Keywords: Principle of natural justice; Set aside
• Section: 271(1)(c); 142(1); 133(6); 143(1); 274; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H , MUMBAI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER & SHRI AMARJIT SINGH, JUDICIAL MEMBER I TA NO. 3927 / MUM/20 1 8 A SSESSMENT Y EAR: 20 11 - 12 HAKIMMUDDIN MANSOORALI PLASTICWALA SHOP NO. 14/C, GROUND FLOOR ARADHANA BUILDING DHOBI STREET, MASJID BUNDER MUMBAI - 400 003 PAN:AA ACPP1052B VS. ITO - 1 3(1)3) AAYKAR BHAWAN M.K.ROAD, CHURCHGATE MUMBAI - 400 020 ( ASSESSEE ) ( REVENUE ) REVENUE BY : SHRI BHADRESH K. DOSHI ASSESSEE BY : SHRI B. YADAGIRI DATE OF HEARING : 1 9 .06.2019 DATE OF PRONOUNCEMENT : 26 . 06.2019 O R D E R PER AMARJIT SINGH, JUDICIAL MEMBER THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 1 4/03/2018 PASSED BY THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 56 HEREINAFTER CALLED [CIT(A)], MUMBAI, RELEVANT TO THE A.Y 20 11 - 12 IN WHICH THE PENALTY LEVIED BY THE ASSESSING OFFICER HAS BEEN ORDER TO THE CONFIRM ED . THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED ASSESSING OFFICER ERRED IN LEVYING THE PENALTY OF RS. 5,56,685/ - UNDER SECTION 271(1) OF TH E ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE PENALTY ORDER UNDER SECTION 271(1)(C) OF THE ACT PASSED BY THE LEARNED ASSESSING OFFICER IS BAD IN LAW IN AS MUCH AS THE APPELLANT NEITHER HAS CONCEALED INCOME NOR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. 2 ITA NO. 3927 /MUM/201 8 HAKIMUDDIN MANSOORALI PLASTICWALA 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER ERRED IN ISSUING NOTICE U/S. 274 R.W.S. 271 WITHOUT STRIKING OFF EITHER OF TWO CHARGES I.E CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND T HEREBY RENDERING THE PENALTY PROCEEDING BAD IN LAW. 2. THE B RIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 28/09/2011 DECLARING TOTAL INCOME TO THE TUNE OF RS. 7,24,064/ - AND THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. THE NOTICES U/S 143(2) & 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE . THE ASSESSEE WAS CARRYING ON THE BUSINESS OF MANUFACTURING OF P.V.C. R AINCOATS, RAIN SUITS, REVERSIBLE SUIT AND P.V.C. A/C JURKING IN THE NAME OF M/S. SUPER PLASTIC CORPORATION, A PROPRIETARY CONCERN . THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS DUE TO THE DEPOSIT OF AN AMOUNT OF RS. 65 ,22,970/ - IN CA SH WITH ICICI BANK, B K C B RANCH DURING THE YEAR WHICH WAS NOT DISCLOSED BY THE ASSESSEE . N OTICE 133(6) WAS ALSO ISSUED TO THE ICICI BANK FOR GETTING THE STATEMENT OF ACCOUNTS. THE STATEMENT REFLECTED TO DEPOSIT IN SUM OF RS. 80,48,061/ - . THEREAFTER , THE DEPOSIT IN SUM OF RS. 80 , 48 , 061.41/ - HAS BEEN ADDED TO THE INCOME OF THE ASSESSEE. THE PENALTY WAS INITIATED ON ACCOUNT OF CONCEALMENT OF INCOME. NOTICES U/S. 271(1)(C) DATED 11/08/2014 WAS ISSUED AND AFTER THE REPLY OF THE ASSESSEE , THE PENALTY IN SUM OF RS. 5,56,685/ - WAS LEVIE D. 3. THE PENALTY WAS CONFIRMED BY THE CIT(A). THEREFORE, THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE US. ALL THESE ISSUES ARE IN CONNECTION WITH THE CONFIRMATION OF THE PENALTY BY THE CIT(A) LEVIED BY THE AO. ISSUES NO.1 & 2 4. WE HAVE HEARD THE ARGUMENT AND ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE PENALTY NOTICE NOWHERE SPEAKS ABOUT SPECIFIC LIMB TO LEVY THE PENALTY BE CAUSE THE PARTICULAR CHARGE WAS NOT TICK OFF IN THE NOTICE, THEREFORE, IN THE SAID CIRCUMSTANCES THE PENALTY IS NOT JUSTIFIABLE HENCE THE ORDER OF THE CIT(A) CONFIRMING THE PENALTY ORDER OF THE AO IS WRONG AGAINST 3 ITA NO. 3927 /MUM/201 8 HAKIMUDDIN MANSOORALI PLASTICWALA LAW AND FACTS AND IS LIABLE TO BE SET ASID E. IN SUPPORT OF THESE CONTENTIONS THE LD. REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE LAW SETTLED IN ITA. NO.1154/M/2014 IN THE CASE OF CIT - 11 VS. SAMSON PERINCHERY AND THE ORDER OF THE ITAT, MUMBAI BENCH IN ITA. NO.2555/M/2012 DATED 28.04 .2017 TITLED AS MEHERJEE CASSINATH HOLDINGS P. LTD. VS. ACIT, CIRCLE - 4(2). HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTIONS. THE COPY OF NOTICE DATED 28.03.2014 IS ON THE FILE IN WHICH THE ASSESSING OFF ICER NOWHERE SPECIFY ANY LIMB TO LEVY THE PENALTY BECAUSE NONE OF THE CHARGE WAS SPECIFICALLY TICK OFF IN THE NOTICE. IT IS NOT IN DISPUTE THAT THE PENALTY U/S 271(C) OF THE ACT IS LEVIABLE ON ACCOUNT OF THE CONCEALMENT OF PARTICULAR OF INCOME AND ON ACCOU NT OF FURNISHING THE INACCURATE PARTICULARS OF INCOME. BOTH HAVE DIFFERENT CONNOTATIONS. IN THIS REGARD, THE HONBLE SUPREME COURT H AS APPRECIATED THE DISTINCTION BETWEEN BOTH THE LIMB IN THE CASE DILIP N. SHROFF 161 TAXMAN 218 (SC). AS PER THE RECORD THE ASSESSMENT ORDER SPEAKS ABOUT LEVYING THE PENALTY ON ACCOUNT OF FURNISHING THE INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF PARTICULARS INCOME BUT THE NOTICE THE NOTICE NOWHERE SPECIFY ANY LIMB TO LEVY THE PENALTY. THE NOTICE IS NOT JUSTIFIABLE IN VIEW OF THE LAW SETTLED BY THE BOMBAY HIGH COURT IN THE CASE OF CIT - 11 VS. SAMSON PERINCHERY AND THE ORDER OF THE ITAT, MUMBAI BENCH IN ITA. NO.2555/M/2012 DATED 28.04.2017 TITLED AS MEHERJEE CASSINATH HOLDINGS P. LTD. VS. ACIT, CIRCLE - 4(2). AT THE TIME OF ARGUMENT, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ALSO PLACED RELIANCE UPON THE FINDING OF THE HONBLE ITAT IN ITA. NO. 2555/M/2012 TITLED AS MEHERJEE CASSINATH HOLDINGS P. LTD. VS. ACIT, CIRCLE - 4(2). THE RELEVANT PARA IS HEREBY REPRODUCED BELOW: - 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 P ARTICULARS 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 PARTICULARS OF INCOME OR FOR 4 ITA NO. 3927 /MUM/201 8 HAKIMUDDIN MANSOORALI PLASTICWALA 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) OF THE ACT EXIST. IT IS A LSO 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 EVE N 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, NAMELY CONCEALMENT OF THE PARTICULARS OF INCOME AND FURNISHING OF INACCURAT E 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 PENALTY U/S 271(1)(C) OF THE ACT, SO THAT THE ASSESSEE CAN DEFEND ACCORDINGL Y. 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 NOT ICE 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. 2 71(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 TW O 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 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 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 PR INCIPLES 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 ENUNCIATED BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF M/S. SSA S EMERALD MEADOWS (SUPRA) AND AGAINST SUCH A JUDGMENT, THE SPECIAL LEAVE PETITION FILED BY THE REVENUE 5 ITA NO. 3927 /MUM/201 8 HAKIMUDDIN MANSOORALI PLASTICWALA HAS SINCE BEEN DISMISSED BY THE HON'BLE SUPREME COURT VIDE ORDER DATED 5.8.2016, A COPY OF WHICH IS ALSO PLACED ON RECORD. 10. IN FACT, AT THE TIME OF H EARING, THE LD. CIT - DR HAS NOT DISPUTED THE FACTUAL MATRIX, BUT SOUGHT TO POINT OUT THAT THERE IS DUE APPLICATION OF MIND BY THE ASSESSING OFFICER WHICH CAN BE DEMONSTRATED FROM THE DISCUSSION IN THE ASSESSMENT ORDER, WHEREIN AFTER DISCUSSING THE REASONS F OR 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 DEMONSTRATE 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 MATRI X 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. FURTHER, IT IS ALSO NOTICEA BLE 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 CIRCU MSTANCES 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 BEFORE OUR COORDIN ATE 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 O F 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 DECISION 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 274 FOR CONCEALME NT 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 SUPPRESSION OF IN COME. 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 CAUSE WHY A PENA LTY 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 INSTANT CASE, TH E ASSESSING OFFICER DID NOT 6 ITA NO. 3927 /MUM/201 8 HAKIMUDDIN MANSOORALI PLASTICWALA 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 TO THE ASSESSEE AND HE WAS NOT SURE AS TO WHAT PURPOSE THE NOTICE WAS ISSUED. THE HONBLE BOMBAY HIGH COURT HAS DISCUSSED ABOUT NON - APPLICATION OF MIND IN THE CASE OF KAUSHALYA (SUPRA) AND OBSERVED AS UNDER: - ....THE NOTICE CLEARLY DEMONSTRATED NON - APPLICATION OF MI ND 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, 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 SPECIFY THE C HARGE 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 REASONING L AID 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. APART 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 ORDER 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 D ATE, 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 IRRELEVAN T CLAUSE 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 ALONGSID E HIS ACTION 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 JU STICE 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 RESPOND. 7 ITA NO. 3927 /MUM/201 8 HAKIMUDDIN MANSOORALI PLASTICWALA 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 ACT DATED 10.12.2010 IS UNTENABLE AS IT SUFFERS FROM THE VICE OF NON - APPLICATION 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 WE LL AS THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT 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 PREL IMINARY POINT, THE OTHER ARGUMENTS RAISED BY THE APPELLANT ARE NOT BEING DEALT WITH. 5 . IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES , THE PENALTY IS NOT LIABLE TO BE SUSTAINABLE ON ACCOUNT OF DEFECTIVE NOTICE. SINCE, THE ASSESSEE HAS SUCCEEDED ON THE BAS IS OF LEGAL ISSUE , THEREFORE, WE ARE NOT INCLINED TO DECIDE THE MATTER OF CONTROVERSY ON MERITS BEING ACADEMIC IN NATURE. IN VIEW OF THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) IS WRONG AGAINST LAW AND FACTS AND IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW, THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND DELETE THE PENALTY. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 6 JUNE,2019 S D / - S D / - ( M. BALAGANESH ) ( AMARJIT SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED : 2 6 . 0 6 . 2019 * THIRUMALESH, SR.PS 8 ITA NO. 3927 /MUM/201 8 HAKIMUDDIN MANSOORALI PLASTICWALA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T 5. THE DR, H BENCH, ITAT, MUMBAI BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBA I