Appeal Details
Counselvise Citation
[2017] 126 COUNSELVISE.COM (IT) 9485 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
8 month(s) 9 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
29-09-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
Not Allotted
Assessment Year
2009-2010
Appeal Filed On
19-01-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 422/MUM/2017 (ASSESSMENT YEAR- 2009-10) SHRI VIREN VINI AHUJA 1, NEELKANTH ROAD NO.6, CHEMBUR, MUMBAI-400071 PAN: AACPA4809M VS. ACIT, CC-8(4), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI J.P. BAIRAGRA (AR ) REVENUE BY : SHRI V. JUSTIN (DR) DATE OF HEARING : 22.08.2017 DATE OF PRONOUNCEMENT : 29.09.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE IN COME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE DIFFERENT ORDER OF LD. CIT(A)- 50, MUMBAI DATED 26.10.2016 FOR THE ASSESSMENT YEAR (AY) 2009-10. T HE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ON THE ADDITION MADE OF UNEXPL AINED INVESTMENT OF RS 33,00,000/ - UNDER SECTION 69 OF THE ACT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN NOT APPRECIATING THE FACT THAT THE ORDER PASSED UNDER S ECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 IS BAD IN LAW AS THE NOTICE UNDER SEC TION 274 READ WITH SECTION 271 WAS ISSUED IN STANDARD PROFORMA WITHOUT STRIKING TH E RELEVANT CLAUSE AND WITHOUT SPECIFICALLY STATING WHETHER THE PENALTY WAS INITIA TED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS THEREOF. ITA NO.422/ M/2017- SHRI VIREN VINI AHUJA 2 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN NOT FOLLOWING THE ORDER OF THE HON'BLE SUPREME COURT IN THE CASE OF VEERBHADRAPPA SANGAPPA & CO (TS- 381-SC-2016) ARISING OUT OF JUDG EMENT PASSED BY THE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING FACTORY & OTHERS (359 ITR 565). 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZU RE ACTION UNDER SECTION 132 WAS CARRIED OUT AT THE RESIDENCE AND BUSINESS PREMI SES OF M/S FLEMINGO/BERMACO GROUP ON 30.10.2009 BY THE DDIT(IN V), UNIT-II(3), MUMBAI. THE ASSESSEE IS ONE OF THE DIRECTORS OF THE SAID GROUP COMPANIES. CONSEQUENTLY, NOTICE UNDER SECTION 153A WAS ISSUED TO THE ASSESSEE. THE ASSESSMENT WAS COMPLETED UNDER SECTION 153A R.W.S. 143(3) ON 08.06.2012. THE ASSESSING OFFICER WHILE PASSING ASSESSMENT ORDE R MADE THE ADDITION OF RS. 33,00,000/- ON ACCOUNT OF UNEXPLAINED INVESTMEN T. ON APPEAL BEFORE THE LD. CIT(A), THE ADDITION WAS ENHANCED FROM RS. 33,0 0,000 TO RS. 3,00,97,000/-. THUS, THE LD. CIT(A) MADE THE ENHANC EMENT OF RS.2,67,97,000/-. INITIALLY THE AO INITIATED PENALT Y VIDE NOTICE ISSUED UNDER SECTION 274 R.W.S 271(1)(C) DATED 08.06.2012. AFTE R THE ORDER OF LD. CIT(A) IN QUANTUM ASSESSMENT A FURTHER SHOW-CAUSE NOTICE D ATED 03.02.2015 FOR LEVYING THE PENALTY WAS ISSUED. THE ASSESSEE FILED HIS REPLY. IN THE REPLY, ASSESSEE CONTENDED THAT AO MERELY REFERRED THE ENTR Y RECORDED IN THE PAPER FOUND DURING THE SEARCH BUT NO FINDING HAS BEEN GIV EN THAT PAPER BELONGS TO THE ASSESSEE. IT WAS FURTHER CONTENDED THAT NO INCR IMINATING MATERIAL WAS FUND AGAINST THE ASSESSEE. THE CONTENTION OF THE AS SESSEE WAS NOT ACCEPTED THE BY AO. THE AO LEVIED THE PENALTY ON THE TOTAL E NHANCED ADDITION OF ITA NO.422/ M/2017- SHRI VIREN VINI AHUJA 3 RS.3,00,97,000/- . THE ASSESSING OFFICER LEVIED PEN ALTY @ 100% OF TAX SOUGHT TO BE EVADED. THE AO WORKED OUT THE PENALTY OF RS. 1,01,22,335/-. ON APPEAL BEFORE THE LD. CIT(A), THE PENALTY WAS SU STAINED ONLY ON THE ADDITION OF RS. 33,00,000/-. THUS, FURTHER AGGRIEVE D BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL B EFORE US. 3. WE HAVE HEARD THE LD. AR OF THE ASSESSEE AND LD. DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN SUPPOR T OF LEGAL GROUND THE LD. AR OF THE ASSESSEE ARGUED THAT THE ORDER PASSED BY THE AO UNDER SECTION 271(1)( C) IS BAD IN LAW AS THE NOTICE ISSUED UNDE R SECTION 274 R.W.S. 271(1)(C) WAS INVALID. THE AO IN THE NOTICE HAS NO T SPECIFIED WHETHER THE PENALTY IS INITIATED FOR CONCEALMENT OF PARTICULAR OF INCOME OR FOR FURNISHING INACCURATE PARTICULAR. THE LD. AR OF THE ASSESSEE W OULD SUBMIT THAT THE COPY OF NOTICED DATE 08.06.2012 IS PLACED ON RECORD AT P AGE NO.40 OF PAPER BOOK. IN THE NOTICE THE AO HAS NOT STRIKE OUT IRRELEVANT PORTION. THE NOTICE WAS ISSUED ON STANDARD PRINTED PROFORMA AND DOES NOT SP ELT OUT UNDER WHICH LIMB OF SECTION 271(1)(C) PENALTY WAS INITIATED. IN SUPP ORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE FOLLOWING DE CISIONS : SR NO. PARTICULARS 1 CIT VS. M/S SSA'S EMERALD MEADOWS. [SLP NO. 11485 /2016 (ARISING OUT OF DECISION OF HIGH COURT KARNATAKA [ITA 380/2015) SUPREME COURT OF INDIA)] 2 CIT VS. M/S SSA'S EMERALD MEADOWS. [ITA 380/2015 (HIGH COURT KARNATAKA.) 3 MEHERJEE CASSINATH HOLDINGS PRIVATE LIMITE LIMITE D VS. ACIT [ITA 2555/MUM/2012] ITA NO.422/ M/2017- SHRI VIREN VINI AHUJA 4 4 CIT VS. SAMSON PERINCHERY (ITA NO. 1154, 953, 109 7/M/2014) 5 DALIP N. SHROFF VS. JCIT (291 ITR 519) (SC) 6 SARITA MILIND DAVARE VS. ACIT (ITA NO. 2187 & 178 9/M/2014). 4. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF AUTHORITIES BELOW. IT WAS ARGUED THAT VARIOUS COURT S HAVE HELD THAT PENALTY CAN BE LEVIED ON THE ADDITIONS ON ESTIMATE BASIS. T HE LD. DR FOR THE REVENUE RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN KAUSHALYA & ORS. (216 ITR 660), THE DECISIONS OF TRIBUNAL IN DHAVAL K. JAIN VS. ITO IN ITA NO. 996/M/2014 AND IN EARTHMOVING EQUIPMENT SERVICE S CORPORATION VS. DCIT (ITA NO. 6617/M/2014). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDER OF AUTHORITIES BELOW. WE HAVE PER USED THE COPY OF NOTICE DATED 10.12.2011 ISSUED BY AO UNDER SECTION 274 R.W .S. 271(1)(C). THE PERUSAL OF THE NOTICE REVEALS THAT THE AO HAS NOT S TRIKE OUT THE IRRELEVANT PORTION OF THE NOTICE. FURTHER, WE HAVE ALSO PERUSE D THE ASSESSMENT ORDER PASSED UNDER SECTION 153A RWS 143(3) DATED 08.06.20 12. THE PERUSAL OF ASSESSMENT ORDER REVEALS THAT THE AO HAS NOT SPECIF IED UNDER WHICH LIMB OF SECTION 271(1((C), THE PENALTY IS INITIATED. THE AO SIMPLY NOTED THEREFOR PENALTY PROCEEDING UNDER SECTION 271(1)(C) IS HEREB Y INITIATED . WE HAVE SEEN THAT THIS BENCH WHILE CONSIDERING WITH ALMOST SIMILAR CONTENTION IN CASE OF MEHERJEE CASSINATH HOLDING PVT. LTD.(SUPRA) HELD AS UNDER: 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S. SEC. 271(1)(C) OF THE ACT EMPOWERS THE ASSESSING OFFICER TO IMPOSE PENALTY TO THE EXTENT SPECIFIED IF, IN THE ITA NO.422/ M/2017- SHRI VIREN VINI AHUJA 5 COURSE OF ANY PROCEEDINGS UNDER THE ACT, HE IS SATI SFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D 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 SI TUATIONS, NAMELY, FOR CONCEALING THE PARTICULARS OF INCOME OR FOR FURNISHING INACCUR ATE PARTICULARS OF INCOME. THEREFORE, IT IS OBVIOUS FROM THE PHRASEOLOGY OF SE C. 271(1)(C) OF THE ACT THAT THE IMPOSITION OF PENALTY IS INVITED ONLY WHEN THE COND ITIONS PRESCRIBED U/S 271(1)(C) OF THE ACT EXIST. IT IS ALSO A WELL ACCEPTED PROPOSITI ON THAT 'CONCEALMENT OF THE PARTICULARS OF INCOME' AND 'FURNISHING OF INACCURAT E PARTICULARS OF INCOME' REFERRED TO IN SEC. 271(1)(C) OF THE ACT DENOTE DIFFERENT CONNO TATIONS. IN FACT, THIS DISTINCTION HAS BEEN APPRECIATED EVEN AT THE LEVEL OF HON'BLE SUPRE ME 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 'CONCEALM ENT 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 PENALTY U/S 271(1)(C) OF THE ACT, SO THAT THE ASSESSEE CAN DEFEND ACCORDINGLY. IT IS IN THIS BACK GROUND 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 10.12.201 0 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 ISS UED 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) O F 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 L IMB IN THE SAID NOTICE DOES NOT CONVEY TO THE ASSESSEE AS TO WHICH OF THE TWO CHARG ES IT HAS TO RESPOND. THE AFORESAID INFIRMITY IN THE NOTICE HAS BEEN SOUGHT T O 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 T HE 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 F ACT 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 CO NCEALED HIS INCOME OR HE HAD FURNISHED INACCURATE PARTICULARS. EVEN BEFORE U S, THE LEARNED ADDITIONAL SOLICITOR GENERAL WHILE PLACING THE ORDER OF ASSESS MENT 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]' ITA NO.422/ M/2017- SHRI VIREN VINI AHUJA 6 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 OF FICER. IN FACT, A SIMILAR PROPOSITION WAS ALSO ENUNCIATED BY THE HON'BLE KARN ATAKA 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 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 HEARING, THE LD. CIT-DR HAS NOT DISPUTED THE FACTUAL MATRIX, BUT SOUGHT TO POINT OUT THAT THERE IS DUE APPLICATI ON OF MIND BY THE ASSESSING OFFICER WHICH CAN BE DEMONSTRATED FROM THE DISCUSSION IN TH E 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, T HE ATTEMPT OF THE LD. CIT-DR TO DEMONSTRATE APPLICATION OF MIND BY THE ASSESSING OF FICER IS NO DEFENCE INASMUCH AS THE HON'BLE SUPREME COURT HAS APPROVED THE FACTUM O F NON-STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE AS REFLECTIVE OF NO N-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 O BSERVATIONS 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 O F THE TRIBUNAL HOLDING LEVY OF PENALTY IN SUCH CIRCUMSTANCES BEING BAD, HAS BEEN A PPROVED. 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 CA SE 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 T HE 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 U P BEFORE OUR COORDINATE BENCH IN THE CASE OF DR. SARITA MILIND DAVARE (SUPRA). OUR C OORDINATE 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 DHARMENDRA 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 (S UPRA) AND THE DECISION RENDERED BY HON'BLE SUPREME COURT IN THE CASE OF DI LIP N SHROFF (SUPRA) WOULD MAKE IT CLEAR THAT THERE SHOULD BE APPLICATION OF M IND 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 IN COME BUT LEVIED PENALTY FOR ITA NO.422/ M/2017- SHRI VIREN VINI AHUJA 7 FURNISHING INACCURATE PARTICULARS OF INCOME. THE HO N'BLE GUJARAT HIGH COURT QUASHED THE PENALTY SINCE THE BASIS FOR THE PENALTY PROCEEDINGS DISAPPEARED WHEN IT WAS HELD THAT THERE WAS NO SUPPRESSION OF I NCOME. THE HON'BLE KERALA HIGH COURT HAS STRUCK DOWN THE PENALTY IMPOSED IN T HE 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 T O SHOW CAUSE 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 FURTHE R HE HAS ISSUED A NOTICE MEANT FOR CALLING THE ASSESSEE TO FURNISH THE RETUR N OF INCOME. HENCE, IN THE INSTANT 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 TO THE ASSESSEE AND HE WAS NO T SURE AS TO WHAT PURPOSE THE NOTICE WAS ISSUED. THE HON'BLE BOMBAY HIGH COUR T HAS DISCUSSED ABOUT NON-APPLICATION OF MIND IN THE CASE OF KAUSHALYA (S UPRA) AND OBSERVED AS UNDER:- '....THE NOTICE CLEARLY DEMONSTRATED NON-APPLICATIO N OF MIND ON THE PART OF THE INSPECTING ASSISTANT COMMISSIONER. THE VAGUENESS AN D AMBIGUITY IN THE NOTICE HAD ALSO PREJUDICED THE RIGHT OF REASONABLE OPPORTU NITY OF THE ASSESSEE SINCE HE DID NOT KNOW WHAT EXACT CHARGE HE HAD TO FACE. IN T HIS BACK GROUND, QUASHING OF THE PENALTY PROCEEDINGS FOR THE ASSESSMENT YEAR 196 7-68 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 NOT ICE DID NOT SPECIFY 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 T HE ASSESSEE.' 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 OU R 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 ALS O REFER TO THE ONE MORE SEMINAL FEATURE OF THIS CASE WHICH WOULD DEMONSTRATE THE IM PORTANCE OF NON-STRIKING OFF OF IRRELEVANT CLAUSE IN THE NOTICE BY THE ASSESSING OF FICER. AS NOTED EARLIER, IN THE ASSESSMENT ORDER DATED 10.12.2010 THE ASSESSING OFF ICER RECORDS THAT THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE TO BE INIT IATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HOWEVER, IN THE NOTICE ISSUE D U/S 274 R.W.S. 271(1)(C) OF THE ACT OF 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 B EEN STRUCK-OFF. QUITE CLEARLY, THE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSM ENT ORDER AND NON-STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE CLEARLY BRINGS OUT THE DIFFIDENCE ON THE PART OF ASSESSING OFFICER AND THERE IS NO CLEAR AND CRYSTAL LISED CHARGE BEING CONVEYED TO THE ITA NO.422/ M/2017- SHRI VIREN VINI AHUJA 8 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 P RINCIPLES OF NATURAL JUSTICE, AND IN THE PRESENT CASE, CONSIDERING THE OBSERVATIONS OF T HE ASSESSING OFFICER IN THE ASSESSMENT ORDER ALONGSIDE HIS ACTION OF NON-STRIKI NG 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 PROCEEDI NGS SUFFER FROM NON-COMPLIANCE WITH PRINCIPLES OF NATURAL JUSTICE INASMUCH AS THE ASSESSING OFFICER IS HIMSELF UNSURE AND ASSESSEE IS NOT MADE AWARE AS TO WHICH OF THE T WO 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 OFFICER U/S 274 R.W.S. 271(1)(C) OF T HE ACT DATED 10.12.2010 IS UNTENABLE AS IT SUFFERS FROM THE VICE OF NON- APPLI CATION 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 JUDGMENT OF THE HON'BLE BOMB AY 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. 6. FURTHER, HONBLE GUJARAT HIGH COURT IN MANU ENGINEE RING (122 ITR 306) AND DELHI HIGH COURT IN CIT VS VIRGO MARKETING (171 TAXMAN 156) HELD THAT W HERE FROM A READING OF ASSESSMENT ORDER, IT WAS NOT CLEAR AS TO WHY ASSESSING OFFICER CHOSE TO INITIATE PENALTY PROCEED INGS AGAINST ASSESSEE AND UNDER WHICH PART OF SECTION 271(1)(C), PENALTY IMPO SED UNDER SECTION 271(1)(C) IS LIABLE TO BE SET ASIDE. 7. CONSIDERING THE DECISION OF THIS BENCH AND THE OTHE R DECISIONS OF THE HIGH COURT REFERRED ABOVE, IN OUR VIEW, THE NOTICE DATED 08.06.2012 ISSUED BY AO U/S 274 R.W.S. 271 OF THE ACT SUFFERED FROM NON-APPLICATION OF MIND. HAVING REGARD TO THE RATIO OF HONBLE APEX COURT I N CASE OF DILIP N. SHROFF VS. JCIT [(161 TAXMAN 218 (SC)] AS WELL AS THE DECI SION OF HONBLE BOMBAY HIGH COURT IN CASE OF SHRI SAMSON PERINCHERY VS. ACIT [ITA 1154, 953, 1097 AND 1226/MUM/2014] DATED 05.01.2017 . THUS, THE GROUND ITA NO.422/ M/2017- SHRI VIREN VINI AHUJA 9 NO.2 OF THE APPEAL IS ALLOWED AND THE PENALTY ORDER PASSED BY AO UNDER SECTION 271(1)(C) DATED 19.03.2015 IS SET-ASIDE. TH E CASE LAW RELIED BY LD. DR FOR THE REVENUE IS NOT HELPFUL TO THE REVENUE AF TER THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. SAMSON PERINCHERY (SUPRA). 8. SINCE WE HAVE ALLOWED THE LEGAL GROUND RAISED BY TH E ASSESSEE. HENCE, THE DISCUSSION ON GROUND NO.2/MERIT OF THE APPEAL HAS B ECOME ACADEMIC. 9. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF SEPTEMBE R 2017. SD/- SD/- (G.S. PANNU) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 29/09/2017 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/
